SELL. Given the significant debt for a business with low visibility and operating in a highly disruptive market environment, describing the balance sheet as “robust” feels a stretch in our view. Pace issuing such authoritative guidance for a company that has warned so frequently seems rather irrational.
BUY. Pace has today issued an AGM that is confident in tone but simply confirms trading is in line with expectations. There is no greater clarity on the impact of the Thai floods. We maintain our share price target of 140p, equivalent to an undemanding price to earnings ration of seven times 2013 earnings.
BUY. First half will be impacted by the hard drive shortages, but trading is in line with expectations. Underlying operating margins are expected to be seven per cent for 2012, and faster than forecast progress towards eight per cent over the next two years could deliver strong upside to estimates.