The second half was better than the first at Genus and with currencies also moving in the company’s favour KBC Peel Hunt thinks the animal breeding firm is set for a stronger performance in the current fiscal year.“Global agriculture is starting to recover as pricing and demand is improving in a number of areas. This is increasing farmers’ confidence and thus their demand for animal genetics,” KBC analyst Charles Hall notes, though the group is not yet firing on all cylinders.
“The bovine market in the US is still weak as milk prices have only partially recovered. Pig prices in China have also remained low and Australia is yet to recover from drought. If these areas turn positive, then we would expect to see an acceleration in underlying performance,” Hall said.
The broker rates the shares a “buy” and has a price target of 800p. “Genus should see strong growth driven by gains in market share, growth in emerging markets with the potential for step changes in profits through technology,” the broker concludes.
Panmure Gordon, meanwhile, has upgraded its fiscal 2011 profit before tax forecast to take into account favourable currency movements. It is now forecasting profit before tax of £32m, up from £31m. It too has a price target of 800p and a “buy” recommendation.
House broker Altium Securities has bumped up its price target for IT security assurance group NCC Group after a strong set of preliminary results.
“The outlook is very positive, reflected in the increased order book levels and the opportunity for further margin progression,” Altium said in a broker note in which it reiterated its “buy” recommendation.
The price target has been lifted from 485p to 500p to reflect the full uplift in profitability from the recent acquisitions.
Altium notes that the management has expressed its intention to expand internationally. NCC CEO Cotton told Sharecast that with the Obama administration set to introduce a higher level of capital gains tax a lot of US companies that are up for sale are “realigning their selling prices”, and that the US is a place where the company is keen to increase scale.
The mixture of organic and acquired growth gets the thumbs-up ftom Altium analyst Jon Fletcher, who thinks it will continue to reap rewards for the group.
KBC Peel Hunt is also a fan of the stock which it thinks is “too cheap on 11x PER [price/earnings ratio], 3.2% dividend yield and estimated FCF [free cash flow] yield of over 12%.”
Were the stock trading on the same PER as its sector its share price would be 560p, KBC analyst Alex Jarvis notes.
Jarvis considers the stock’s discount to its peers undeserved, “given the group’s track record of organic growth, market positions and above average EBITA [earnings before interest, tax and amortisation] profile of over 25%.
Investors attracted by the near double-digit dividend yield of T Clarke will have been reassured by the electrical engineer’s trading statement on Monday morning in which it revealed an improvement in the order book.“Its order book has increased from its year end position of £170m to £220m. The integration of D&S, its small recent FM acquisition, is going well. The balance sheet remains sound with a net cash position (PG y/e estimate £10m),” said Panmure Gordon, listing the company’s virtues.
“The outlook remains challenging with contracts taking longer to be closed but management remain confident in its medium term prospects,” the broker added.
Though the eye-catching dividend yield is the main reason for holding the stock in Panmure’s view, the group’s strong historic London base means it remains well positioned to benefit from the emerging recovery in commercial spending.
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