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GRAPHIC-Downgrades, profit warnings ring Brexit alarms for UK mid-caps

* FTSE 250 vs FTSE 100: reut.rs/2eCvwk9

* Profit warnings spark broker downgrades

* Earnings disappointments lead to outsized moves

* Senior, Cobham, Laird among midcaps warning on profits

By Kit Rees

LONDON, Oct 25 (Reuters) - A spate of profit warnings among mid-sized British companies, big slides in stock prices and a rush of broker downgrades have seen the third-quarter earnings season off to a weak start as Brexit-related cracks start to show.

So far profit warnings from smartphone maker Laird, engineers Keller and Senior, aerospace and defence firm Cobham as well as a disappointing update from NCC have triggered punishing share price falls.

A rally in the UK mid-cap index, which recovered sharply from a slump following the referendum vote to leave the European Union, has stalled over the past week as profit warnings took their toll.

It is once again lagging the more internationally focused FTSE 100, as this chart reut.rs/2eCvwk9 shows.

While the FTSE 100 is up around 11 percent since the June 23 close, the FTSE 250 is up only 2.6 percent, having slipped from an all-time high reached earlier this month, at least in part because its constituents tend to be more exposed to a domestic economy whose growth could be constrained by Brexit.

By contrast, the greater international spread of FTSE 100 members means their sterling profits and dividend-paying abilities actually benefit from the pound’s multi-year weakness.

The outsized moves on stocks that disappoint illustrate how unforgiving investors are of weakness in company earnings.

Chipmaker Laird for example saw nearly half its market value wiped off in a single day last week after warning of sharply lower profit, blaming a slowdown in smartphone sales and pricing pressure.

WORST DAY

Cyber security firm NCC Group also marked its worst day ever, tanking more than 35 percent after troubles with contract cancellations.

Senior fell 13 percent after blaming lower demand for parts used in heavy truck production for its profit warning, while Cobham lost a similar amount after its second profit warning this year.

Brokers have scrambled to cut earnings expectations and price targets on a slew of UK mid-range companies.

Laird, Countrywide, Howden Joinery Group, Mitchells & Butlers and Aldermore, all saw negative broker activity on Tuesday, sending their shares 2.6 percent to 5 percent lower on the day.

Almost every brokerage cited concerns about a post-Brexit economic slowdown impacting these businesses.

“Within the midcap area we’ve had a number of profits warnings recently,” Stephen Bailey, a fund manager on Liontrust’s Macro-Thematic team, said. “A lot of those are stemming from either currency fluctuations or indeed the uncertainty that’s been created by the Brexit vote.

“The economy stalled ahead of the Brexit vote ... and in certain areas it hasn’t really got going again,” Bailey added. “So it’s not surprising we’re seeing a number of these warnings coming through, and I would expect that’s probably going to be set to continue.” (Editing by David Holmes)

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