Darktrace shares were under attack on Wednesday after its US cybersecurity peer Palo Alto Networks slashed its sales guidance amid softer client spending.
The Nasdaq-listed company cut its annual revenue guidance to between $7.95 billion and $8 billion, down from a range of between $8.15 billion and $8.2 billion, which analysts said reflected the group’s plans for steep promotions including an offer of up to six months of free services to customers who are switching to its one-stop-shop platform for cybersecurity products.
Palo Alto Networks also revised down its total billings guidance to between $10.1 billion and $10.2 billion, down from $10.7 billion to $10.8 billion.
“The strategy makes sense, and it aligns with strategies we have seen other platform vendors deploying, but we expect Palo Alto Networks stock will remain under pressure for a while as the change is contributing to a cut to billings guidance,” JP Morgan analysts said in a client note.
The read-across stretched across the Atlantic amid fears that Darktrace could face similar challenges, sending its shares down 18p, or 5 per cent, to 342p. The FTSE 250 company will next update the market in March when it delivers its half-year results.
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It was a miserable day for much of the wider market. The FTSE 100 fell sharply by 56.70 points, or 0.7 per cent, to 7,662.51 on the back of a spate of disappointing results from banks and miners, while the more UK-focused FTSE 250 edged up slightly to finish 9.34 points, or 0.1 per cent, up at 19,118.97.
HSBC appeared to cause the most upset as shares in the Asia-focused lender dived 54p, or 8.4 per cent, to 589¾p after its record annual profits of $30.3 billion came in shy of what the City had expected. Lloyds Banking Group, which will update the market on Friday, edged down 0.8 per cent to 43¼p.
Centrica was another faller as analysts at Liberum held the view that consensus valuations reflect an overly optimistic assessment of the energy group’s long-term cash and investment plans. The shares flowed 4p, or 3.1 per cent, lower to 129¼p.
The recovery rally in Close Brothers shares was short-lived, with shares in the merchant bank off another 29¾p, or 8.4 per cent, at 323½p as concerns resurfaced about the Financial Conduct Authority’s investigation into car loans. Fitch downgraded the FTSE 250 company’s credit rating on Tuesday, citing expectations of weaker profitability in the medium term.
Bytes Technology came under heavy selling pressure in afternoon trading after the software seller announced the sudden exit of its chief executive, Neil Murphy. The shares, which were down more than 18 per cent during intraday trading, closed 64½p, or 10.7 per cent, to lower at a more than two-month low of 537p.
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Investors did, however, take a liking to BT selling off its famous central London tower for £275 million, with the telecoms group up 1¾p, or 1.6 per cent, to 108½p as a result.
B&M European Value Retail was also given a lift on the back of some upbeat analysis from Nationwide, which revealed that households spent 41 per cent more at discount stores in January versus the same period last year. Shares in the FTSE 100 retailer increased 7p, or 1.3 per cent, to 524¼p.
Investors continued to pile into Currys following the recent takeover interest in the electrical retailer, rising another 2¾p, or 4.1 per cent, to an 11-month high of 68½p. As they tipped their clients to buy the stock, analysts at HSBC said the offers from Elliott Advisors highlighted the overlooked value of the business.
City dealers also raised a glass to C&C Group, whose shares fizzed 2¼p, or 1.4 per cent, to 156¾p after the Bulmers and Magners owner announced plans to launch a €15 million share buyback, while Ceres Power gushed 10¼p, or 6.5 per cent, to close at 168p as UBS stamped a “buy” rating on the fuel-cell specialist in the belief that there is a growing pipeline of new partners set to join the Ceres platform.
Wall Street report
Indices were mixed after minutes from the Federal Reserve’s January meeting reaffirmed market bets that rates will not fall in the near term. In a late rally, the Dow Jones industrial average rose 48.44 points, or 0.1 per cent, to close at 38,612.24.
