Accounting heavyweight, Sage, saw its share price fall by 4.6 per cent after desultory results that showed a nine per cent decrease in year-on-year profit before tax.

The results have sparked a flurry of downgrades from analysts as the tech firm reported that its operating profit margin shrank 3.4 per cent to 19.7 per cent, and its share price now stands at 720p at the time of writing. Investment bank, UBS, warned that more downgrades may follow due to disposals and a 2020 23 per cent margin goal.

While it was good news for Sage’s cloud products, with a 10.8 per cent rise in recurring revenue to £1.56bn, it recorded an 18 per cent drop in traditional product sales. Sage has been pouring money into updating its product line-up, and investing in cloud solutions, but can investors expect this to pay off?

Opinions are mixed on this one – some analysts think the rise in recurring revenue is good news and point to the accounting software firm’s almost 20-year history of consecutive dividend increases as a positive sign. Others however are concerned by the fall in operating profit and the drop in expectations for the firm over the past two years. In 2018, for example Sage expected organic revenue growth of around eight per cent but after a disappointing performance that year where the Chief Executive left and was replaced by the Finance Director, organic revenue growth hit just six per cent. Yet today’s share price represents 24.9 times the current underlying earnings-per-share of 28.4p, which many believe is a hugely elevated price. While once Sage had a comfortable stronghold on the accounting software market, there has been a proliferation of competition in recent years – the firm will need its investment in the cloud to pay off if it is to make its numbers stack up again.

Tech company IQE, which supplies Apple with semiconductor wafer chips, has also seen its share price plummet after similarly disappointing results. Shares fell by more than a quarter, to 47.57p, after the firm slashed its revenue forecast for the second time in five months.

IT blamed the ongoing US-China trade wars for its shortfall in revenue, and claimed it was confident it ‘’remains very well positioned for returns to growth in 2020.’

Earlier this year, the tech firm downgraded its full-year guidance to between £136 and £142 million after its supply chain was seriously impacted by the US restrictions on China’s phone company Huawei. IQE also announced it’s expecting a mid-single-digit operating loss for the full year.

So, with no end in sight to the trade tussles just yet, what’s the outlook for Cardiff-based IQE? While analysts have downgraded its target price – Barclays and Peel Hunt both adjusted to 73p and 95p respectively, investors might not need to worry just yet. Both banks still think the stock can bounce back, believing it has a potential upside of between 52% and 97%. In the short-term though, analysts think the stock has turbulent times ahead with some pointing out it is currently the sixth most shorted stock in the UK right now. Its potential in the longer term, however, may depend on how the trade wars at the other side of the Atlantic continue to play out.