Broker tips: Croda, CentralNic, Sanne
Barclays upgraded Croda to 'equalweight' from 'underweight' and hiked the price target to 8,400.0p from 6,000.0p, citing a "much-improved" growth outlook, after the speciality chemicals company’s results earlier in the week.
The bank said it has underestimated the extent to which Croda is benefitting from the ongoing vaccine boom.
"In addition to its leading lipid offering for the mRNA technology, the legacy adjuvants and excipients businesses have also contributed to a step-change in profitability," it said.
"Our concerns about the sustainability of Pfizer vaccine revenues have not entirely dissipated, but they are now less pronounced given the large number of other projects Croda is working on."
Barclays lifted its 2021 EBIT forecast by 14% to £454.0m, broadly in line with implied guidance and 10% above pre-results company-compiled consensus.
Analysts at Berenberg raised their target price on domain registrar CentralNic from 180.0p to 200.0p on Friday, stating the firm's "true potential" had been revealed.
Berenberg said CentralNic was "a misunderstood business", which looks "very different" now when compared to a few years ago thanks to its newly formed high-growth online marketing business that makes up more than half of the firm today.
In its initiation note in June, Berenberg highlighted the potential for top-line growth to accelerate, driven by online marketing and the sale of value-added services alongside domains.
With CentralNic reporting 20% organic growth in its interim trading update earlier in the week, Berenberg now believes its thesis has started to play out.
"On an annualised basis, the reported top-line numbers were circa 11% ahead of consensus and consequently the stock was up circa 10% on the day and is up circa 20% since our initiation," said Berenber, which reiterated its 'buy' rating on the stock.
"With management confident of delivering revenue for the year well ahead of market expectations, we more than double our organic growth forecast for FY 2021 and raise our price target to 200.0p, which still represents circa 110% upside to the current share price."
Analysts at Liberum hiked their target price on Sanne from 660.0p to 875.0p on Friday following the group's interim results earlier in the week and due to an updated takeover offer from Cinven.
Liberum stated Sanne's first-half trading update released on Wednesday guided to trading being in line, but stated there was also encouraging progress on new business wins, which were up roughly 38% on half-on-half.
The analysts also noted that within the trading update, Sanne announced its acquisition of PraxisIFM's European fund administration business for £54.0m, which lead them to increase their full-year fully diluted earnings per share estimates by 4.5%.
"Our FY21 net debt estimate rises from £17.0m to £72.0m, or 1.2x net debt/EBITDA, as we expect the cash consideration to be paid on 1 November," added Liberum, which maintained its 'hold' rating on the stock given ongoing takeover discussions with Cinven.
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