Analysts at Berenberg lowered their target price on home repairs and improvements business Homeserve from 1,260.0p to 1,205.0p on Tuesday, stating a bid from Brookfield Asset Management’s infrastructure fund appeared to be approaching.
Berenberg noted Homeserve’s shares were now up 73% since their lows at the start of March, following the takeover approach from Brookfield.
While the German bank acknowledged that an official offer was yet to come through, speculation from Bloomberg indicated that the fund could reach an agreement “in the coming days” – with a $5.0bn price tag attached.
Berenberg, which reiterated its ‘buy’ rating on the stock, stated that with it unclear whether the $5.0bn referred to equity or enterprise value, it opted to move its price target down and also update forecasts following the Hoemserve’s year-end trading update, leaving earnings per share estimates broadly unchanged.
“Like many services companies, Homeserve is a difficult business to value given the lack of comparable listed businesses, leading to volatile valuations and share prices (as witnessed over the last two years),” said the analysts.
“Using a combination of historical Homeserve multiples and a SOTP that uses peer transaction values, as well as Homeserve’s stated profit targets and prudent assumptions for the ‘mature’ segments of the group.”
Reporting by Iain Gilbert at Sharecast.com
