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(Sharecast News) - Shares in RWS Holdings tumbled on Thursday, despite the tech firm posting in-line interim numbers and reaffirming guidance for the full year.
The AIM-listed business, a specialist in language services, posted a 5% uplift in revenues in the six months to 31 March, to 360.3m, while adjusted earnings before interest, tax, depreciation and amortisation jumped 20% to 45.7m.
On an organic, constant currency basis, revenues rose 7%.
RWS said artificial intelligence-related products now accounted for 32% of group revenues, up from 26% a year ago, led by a strong performance from its TrainAI business.
Ben Faes, chief executive, said the group had made "significant" progress on its strategic priorities.
He continued: "This performance reflects the initial positive effects of our new operating model and the important milestones achieved across our thee strategic growth pillars.
"While we are conscious of the geopolitical environment, we are executing with discipline and momentum continues to build, underpinning our expectations for a full-year performance in line with guidance."
However, the positive outlook was unable to stop the shares tumbling, and by noon they had plunged 18% at 84.01p as investors cashed out and concerns lingered over full-year profits.
Shore Capital, which has a 'buy' rating on the stock, said: "While management upped confidence for full-year revenue expectations, there are a few moving parts to consider for adjusted operating profits.
"Guidance remains for a year-on-year improvement, and RWS anticipates that second half margins will be ahead of the first half.
"However, the strong top line performance drop through is likely to be offset by the mix of TrainAI as well as a 2m adverse FX movement, and around 1m acquisition impact. Therefore we reduce our adjusted operating profit to around 70m from 74m, as well as now including a 4m FX adverse impact on our 2027 and 2028 forecasts."
Shore Cap also flagged a particularly strong share price performance over the last three months, noting that it had been approaching its fair value of around 115p.
However, reiterating its recommendation, the broker concluded: "Overall we still believe there is a large market opportunity for RWS, and given its market position, technology and the actions undertaken by management to refocus the operating model, we believe it's well placed to leverage this next phase of growth."
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