Analysts at Jefferies reiterated their ‘buy’ recommendation for shares of Avon Protection despite the company’s profit warning earlier in the same session.
In their judgment, the long-term equity story behind the maker of personal protection gear for the world’s militaries and police remained “positive”.
Earlier in the same session, the firm had cut its guidance for full-year 2021 and 2022 sales, citing a mix of delayed contract awards and supply chain disruptions as the cause.
Nevertheless, Jefferies emphasised that the constellation of short-term challenges were not of Avon’s making and hence, in the broker’s view, did not take away from the long-term outlook.
“Ultimately, while the magnitude of the consensus downgrades will not be well-received, we view the equity story as being intact, the group’s fundamentals are still strong, there are attractive top/bottom-line opportunities, and a Balance Sheet to play with,” said Jefferies, which also stood by its 4,180.0p target price on the stock.
“However, sentiment will be impacted and confidence in the new guidance will need to be rebuilt.”
Over at Berenberg, analysts took a fresh look at insurance firm Aviva on Friday, stating the firm’s capital return was “a compelling reason” to buy.
Berenberg, which kept its 478.0p target price on the stock unchanged, said Aviva’s clarification on its intention to return a minimum of £4b.0n of excess capital to shareholders by the middle of 2022 put it “at the top of the class” for shareholder returns over the next 12 months.
The German bank noted this was equivalent to roughly 25% of the firm’s current market cap, while investors will also receive the ordinary dividend yield of roughly 5.7%.
“We believe that this is a fairly compelling reason to own the shares that are still trading at sub 10x 2022E earnings,” said Berenberg, which also reiterated its ‘buy’ rating on the stock.
“Aviva offers significant upside from current levels as it trades on low valuation multiples on an IFRS basis. However, we believe the market will look for further progress on achieving its targets before rerating the shares.”
