Analysts at Berenberg raised their target price on media outfit WPP from 980.0p to 1,030.0p on Friday after third-quarter growth came in higher than consensus.
Berenberg stated that while “strong results” posted by rivals Publicis and IPG had led to “a whisper number” for WPP’s growth that was higher than the 9.8% anticipated by analysts, the 15.7% that the firm ultimately published was “clearly better than expected”.
Although Berenberg, which reiterated its ‘hold’ rating on the stock, acknowledged that figure included a one-off that it estimates added around 130 basis points to the result, the analysts said even excluding this boost it was a strong result.
“On a two-year stack (versus Q3 2019) growth was 6.9%, which compares to a two-year increase of 5.0% for Publicis, 10.8% for IPG and -1.5% for Omnicom,” noted Berenberg.
The German bank added that the valuation gap was still wide, pointing out that for those investors that can “get comfortable” with the medium- to long-term sustainability of growth for the agencies, both WPP and Publicis were “cheap”.
“However, we think it will take several more quarters of decent growth to persuade the doubters. In the meantime, Publicis, which has given back the gains it initially made with its own strong results, remains far cheaper than WPP, which is why we maintain our preference for the French group,” concluded Berenberg.
Shares of miniature wargames manufacturer Games Workshop tumbled on Friday after Jefferies cut its estimates and price target to reflect freight and forex challenges.
The bank cut its FY22 revenue estimate by 2% to £380.0m and its pre-tax profit estimate by 4% to £157.0m.
Jefferies said it was keeping an eye on signs of discontent in the Warhammer fan base, although it is “not overly concerned at this stage”.
The bank, which rates the stock at ‘buy’, cut its price target to 12,250.0p from 13,200.0p.
Analysts at Numis raised their target price on Hilton Foods from 1,450.0p to 1,500.0p after the firm’s acquisition of butcher Fairfax Meadow.
Numis said Hilton’s acquisition of Fairfax Meadows, a leading supplier of red meat into the UK’s foodservice sector, fits well with the group’s expanded capabilities in terms of meat trading and sous vide.
The broker also noted that the £23.8m cash purchase, funded from its existing debt facilities, provided Hilton with an opportunity to sell its other proteins, such as fish and plant-based, into the foodservice channel.
“As such, we believe that the acquisition provides a long-term growth opportunity for Hilton, said Numis.
“We have upgraded our adjusted earnings per share forecasts by circa 3% to reflect the acquisition in full-year 2022/2023 estimates. The valuation looks attractive on 17.3x PE and 8.4x enterprise value/earnings before interest, tax, depreciation and amortisation for calendar year 2022.”
