Analysts at Numis downgraded their recommendation for shares of Softcat from ‘add’ to ‘hold’ after the IT infrastructure provider delivered what they termed an in-line set of full-year results.
Numis conceded that the company’s dividend and cash position both came in ahead of estimates, and also noted the firm’s continued strong growth in the mid-market and public sector segments.
As a result, Numis revised its estimates for Softcat’s total dividend per share by 20%, comprised of 10% growth in its ordinary EPS and a flat special dividend payout.
On the flip-side, the analysts did note that it was very difficult to quantify the impact that product shortages might have.
However, Numis added that “being one of the largest VAR in the UK means the group’s scale and vendor relationships provide options when supply is constrained”.
Changing hands at 32x the company’s estimated enterprise value/underlying earnings multiple for 2022, Numis stated the shares were on a “well-deserved premium” given its “track record of growth and delivery”.
Analysts at Canaccord Genuity cut their target price on mining firm Hummingbird Resources from 35.0p to 25.0p on Tuesday, stating now was the time for the firm to regain the market’s confidence.
Canaccord said that despite its “continued belief” in the “compelling value upside potential” of Hummingbird, it now reckons repeated operational setbacks had eroded of the market’s trust in the company to deliver on that potential.
Following the emergence of further operational challenges at the firm’s Yanfolila project during the third quarter, the analysts moved to adjust their estimates on the firm, now expecting it to produce around 97,000 ounces of gold this year, down from 103k,000, slightly below the bottom end of the 100,000-110,000 ounce guidance range.
In line with company expectations, Canaccord has modelled a “significant improvement” in output during the fourth quarter to make it the strongest quarter of the year, but just not quite strong enough to hit the company’s target of the bottom of its guidance range.
“We believe our modelling of HUM is conservative, but prudent given the repeated disappointment HUM investors have suffered in recent years. We reduce our target price to 25.0p (based on 1x NPV, rounded to nearest 5.0p). Maintain ‘buy’ rating,” said the analysts.
Analysts at Berenberg raised their target price on ten pin bowling centre operator Hollywood Bowl from 280.0p to 300.0p on Tuesday, stating there was a “strikingly obvious upside” to the stock.
Berenberg thinks the risk-reward profile of buying Hollywood Bowl shares has now very much so skewed to the upside, with sales running at a rate well ahead of 2019 levels.
The German bank highlighted that if the company can maintain even part of that momentum, the earnings upgrades this year will be “enormous”.
On the other hand, if it doesn’t, Berenberg believes the worst-case scenario for the stock will be that it merely meets its estimates and delivers “nice growth” as shareholders have a strong pipeline of new openings to look forward to.
Credit Suisse reiterated its ‘underperform’ rating on shares of online supermarket Ocado on Tuesday and cut the price target to 1,500.0p from 1,550.0p as it said there was “little room for new optimism”.
The bank said it was revisiting its investment case “in the context of the Kroger announcement last week, AutoStore IPO finalisation and Erith 4Q21E capacity”.
Credit Suisse said there was no immediate upside from the Kroger announcement on 12 October, in which the US company said it was aiming to enter the Northeast through its e-commerce partnership with Ocado.
The Swiss bank also said it was incorporating slower-than-initially-expected ramp-up at the Erith warehouse following the fire there.
“We think that Ocado has not been able to regain market share losses from 2020 capacity constraints due to 2021 disruption, while Purfleet and Bristol new capacity was mostly offsetting lower Erith volumes,” it said.
