United Group (UGL) shares recommendation by Macquarie Research Equities: A disappointing result sees a stock price plunge. The stock analysts reaffirm their outperform guidance on the company.

The severity of the punishment meted out to diversified services provider United Group Limited (UGL) this morning after the company fell short of expectations, has illustrated the low level of tolerance that exists this reporting season. Despite the 46% rise in half year profits to 31 December 2007, UGL have fallen around 19% in the morning session after missing consensus forecasts.

The company reported Net Profit After Tax (NPAT) this morning at $51.5m for the half. Whilst the figure represents a 46% increase on pcp the stock shed 18% in today’s morning trade session.

MRE had forecast NPAT expectations of circa $58.0m. Subsequently, it seems the company has fallen short of expectations and the shares have been sold down. MRE attribute the shortfall in profit to increased overheads, problems with key infrastructure contracts and the initial amortisation of goodwill. Also of concern was the cashflow figure of $7m, given a $63m increase in working capital.

Despite the shortfall in profit expectations, MRE re-affirm their “outperform” guidance for the company. MRE have readjusted marginally their EOY profits but still anticipate a 44% growth in sales for the year. MRE believe the company is likely to benefit from the strength of the non-residential cycle and continues to offer comparative to its competitors, namely WOR, TSE, and LEI