(Sharecast News) – Berenberg upgraded its stance on shares of investment platform AJ Bell on Tuesday to ‘hold’ from ‘sell’ and hiked their price target on the stock to 400.0p from 230.0p.
The bank noted AJ Bell’s momentum from both macro and structural drivers helped the company to beat FY20 expectations, posting results in December that were up by 27% year-on-year at the earnings per share level.
“That is a remarkable performance during a year that was heavily affected by Covid-19 and associated market volatility,” it said. “We continue to believe that interest rate cuts in FY20 will create headwinds; however, we now view the FY21 headwinds as manageable in the context of the group’s overall profitability.”
Berenberg said it is forecasting flat EPS in FY21 before a resumption of growth in FY22-23, driven by inherent operating leverage and long-term structural growth drivers.
“However, with shares currently trading on circa 50x CY21, we view the company as perfectly priced; hence our hold recommendation.”
Analysts at Canaccord Genuity maintained their ‘hold’ rating on Spirent Communications on Tuesday following the group’s fourth-quarter trading update.
Canaccord said Spirent’s third-quarter update led it to reduce its above-consensus estimates back in November and stated that yesterday’s full-year trading statement suggested that the mixed revenue trends had continued into the last three months of the year, with year-on-year growth slowing to 0.5% from a solid 7.5% in the first half.
The Canadian broker noted that Covid-19 had impacted demand from some lab and service provider customers, but also acknowledged that positioning/GNSS sales to the US government had encouragingly begun to pick up.
“Strong cost execution coupled with a return to sustainable, 5G-fuelled, sales expansion have driven double-digit EPS growth in 2019 and 2020 and commendable margin improvement to ~20%. We expect more gradual margin improvement from here, meaning EPS growth will align more closely with expected mid-single-digit revenue growth from here,” said the analysts, who stood by their 250.0p target price on the stock.
Jefferies included drugs manufacturer Indivior on their latest quarterly list of 15 key buy ideas in the UK small and mid-cap space.
Analyst Harry Sephton argued that the company’s shares were not pricing in “sufficient upside” for Sublocade, the company’s treatment for medium-to-severe opioid addiction.
He estimated financial markets were pricing in peak sales below $250.0m for Sublocade, projections that he believed were “too conservative”.
To back up his case, Sephton pointed out how sales of Sublocade were already running at an annual pace of approximately $150.0m and continuing to grow “incrementally”.
Furthermore, the patient population was growing at a double-digit pace and proprietary surveys showed that doctors were anticipating a significant uptake over the next five years.
Covid-19 restrictions had also been hampering sales and marketing activity for Sublocade, but that was expected to change.
Sephton had a ‘buy’ recommendation and 180.0p target price on Indivior’s shares, using a sum-of-the-parts net present valuation method and a 10% weighted average cost of capital to derive the latter.
