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PureCircle setback sours shares

Shares in stevia producer PureCircle sank after management warned that revenue will miss expectations due to a now-lifted US embargo, but investors should not be put off by this temporary setback
May 2, 2017

The embargo on stevia producer PureCircle (PURE) may have been dropped in January, but the company's eight-month absence from the US market has taken its toll. The shares fell 9 per cent after the group warned that revenue for the year would be "materially below market expectations" due to a slow comeback in the US and delays to new product launches.

IC TIP: Buy at 343p

Despite the border crossing headache, demand for the sugar substitute continues to accelerate as the number of brands using PureCircle stevia globally was up 18 per cent year on year. The expansion of its stevia facility in Malaysia doubled the previous capacity to meet demands from commercial food producers.

Analysts estimate pre-tax profits of $6.8m (£5.3m) in 2017, giving EPS of 3.6p, down from $17.9m and 8.5p in 2016. But this is expected to recover in 2018 to $18.2m and 9.7p, and $25.8m and 13.3p in 2019.