Hopes fade for Invensys earnings recovery

Analysts declared yesterday that shares in Invensys, the automation and controls group, could be worth nothing as expectations of an earnings recovery at the troubled electronic equipment manufacturer receded.

Analysts declared yesterday that shares in Invensys, the automation and controls group, could be worth nothing as expectations of an earnings recovery at the troubled electronic equipment manufacturer receded.

The company's shares, already under siege after a massive restructuring this year, fell 13.5 per cent to 11.25p on the back of the latest analyst downgrade.

Colin Grant, an analyst at Dresdner Kleinwort Wasserstein (DKW), said Invensys shares were likely to trade "in a range between 0 tp 15p" and slapped his own price target of 5p on the stock.

However, Mr Grant cautioned investors that even 5p was "a nominal level" and that he believed there would be no bid for the company given the ongoing operating problems and the pension poison pill.

In February Invensys secured a £2.7bn refinancing agreement with creditors, which included a £447m fund raising from shareholders. It has been dogged by poor trading but also financial problems, including a pension deficit of more than £800m.

Earlier this month Merrill Lynch issued a sell note, saying the company needed a substantial injection of equity of at least £500m to help stabilise its financial performance.

Yesterday's downgrade from DKW said: "We have re-evaluated our estimates on the stock after the [first quarter]results and the continued downturn in the OECD leading indicator. Consequently we have cut our full-year earnings per share to 0.2p from 0.6p and reduced our price target to 5p from 12p."

Invensys dismissed the research note. A spokesman said: "There's nothing new in it."