Goodbody Stockbrokers is recommending Horizon as a buy for investors at the moment but it does carry a "high risk" warning. The company issued a profit warning earlier in May, citing margin contraction at its Internet services business as its customers cut back on investment in IT.

Horizon has since announced the cutting of 60 jobs and a realignment of its cost base. Following discussions with the group's management, Goodbody suggests that the weakness in its business is largely confined to the UK.

In the short term, risks include the potential for softness in the distribution business, particularly within large reseller accounts, and the possibility of a similar pattern developing beyond the Internet infrastructure business in the Republic. The brokers believe business will remain challenging in the UK as competition forces management to reduce rates to secure contracts.

The Irish market remains strong and should provide a layer of insulation from the difficult trading environment in the UK. It has set a year-end price target of €2.5 (£1.97) for the shares.