Analysts at Berenberg raised their target price on manufacturing firm Senior from 85.0p to 112.0p on Thursday but cautioned that the group’s profit outlook remained “unclear”.
Berenberg said Senior was considered a favoured way to play the “reopening trade”, given the group’s exposure to both aerospace and industrial end-markets, a theory that had been reinforced by positive 737 MAX momentum and a broader market rotation into value stocks, with the shares the best performing in the sector year-to-date
However, the German bank stated that Senior continues to face “a long and uneven recovery path ahead”, and said it still struggles to be “more constructive” on the equity story without higher conviction in its profit forecasts.
“With the shares now trading in line with the sector on 17x consensus 2023 price-to-earnings ratio, we think they are fairly valued,” said Berenberg, which made the move to raise its target price on the stock due to higher peer multiples and modest upgrades to outer year estimates.
Berenberg also stood by its ‘hold’ rating on the stock, stating it think there limited material upside to its sales or margin forecasts remain over the near-term, with the potential for further downside should the recovery profile take longer than expected.
