Merrion cuts Irish economic, company forecasts on Brexit

Merrion Capital cut its forecasts for the Irish economy and company earnings and sees further losses by the Iseq index as it weighs the impact of Brexit.

The Dublin-based firm lowered its Irish gross domestic product estimate for this year to 4.8 per cent from 5.3 per cent, with growth set to come in just below 4 per cent.

“The reduction in our GDP assumptions are mainly driven by lower net exports, with consumption likely to be negatively impacted, but to a lesser degree,” according to the report, adding that it has also cut its UK economic forecasts

Merrion cut its Bank of Ireland full-year earnings per share estimate by 11 per cent, and now sees the lender posting a 12 per cent decline in net income. Almost 20 per cent of the company's profits is generated in the UK.

The investment company also cut its EPS forecast for Ryanair, which generates a quarter of its profits in the UK by 7 per cent. Its estimates for Kingspan, C&C, Irish Continental Group, UDG Healthcare and Origin Enterprises have also been cut by at least 5 per cent for this year.

“We continue to show a preference for domestic Irish [real estate investment trusts]...with the Iseq likely to test the 5,100 level once again,” it said.

The Iseq is currently just above 5,500 points, having fallen about 14 per cent since the UK referendum. It hasn’t been as low as 5,100 since January 2015.