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£400mln wiped from Sophos’s value as it fails to repeat two key targets for next year

Last updated: 23:04 07 Nov 2018 AEDT, First published: 19:48 07 Nov 2018 AEDT

cyber security
Analysts are cutting their targets after today’s update

Sophos Group PLC (LON:SOPH) shares were in need of protection on Wednesday after the IT security specialist’s first-half performance and outlook disappointed.

The FTSE 250 group reported a 3% rise in first-half billings to US$353mln, below previous guidance of 6%.

READ: Deutsche Bank downgrades Sophos

In July’s first-quarter update, it had warned that growth wouldn’t be as explosive as prior years, given the particularly tough comparatives in the year-ago period.

Sophos had, though, hoped to return “mid-teens” billings growth in the second half, but it is now guiding for just a “modest improvement”.

As for next year, Sophos expects to see a “significant improvement” in year-on-year billings growth.

But it failed to repeat its prior targets for US$1bn in billings and more than US$100mln in adjusted operating profits, leading analysts to believe they have been pushed out.

“We provisionally expect to ease down our estimates for FY19 and FY20 by c5% at the billings line,” said Shore Capital.

Back to the first half, Sophos swung to a pre-tax profit of US$26mln, reflecting an 18% rise in revenue to US$350mln and foreign exchange tailwinds.

Shares took a beating on Wednesday, down 25.9% to 338.4p.

-- Updates for share price and analyst comment --

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