Analysts at Berenberg slashed their target price on safety equipment supplier Avon Protection from 2,955.0p to 1,740.0p on Thursday after the group cut its full-year guidance by roughly 40%.
Berenberg stated that if 2020 was “a year to remember” for Avon Protection, then the 2021 trading year had certainly been “a year to forget”.
With several challenges coming to the fore, Avon “materially downgraded” its full-year 2021 and full-year 2022 guidance and while Berenberg noted that if its full-year 2023 numbers can be achieved, the stock still trades at “an undemanding” 16.5x price-to-earnings ratio for a 4.0% free cash flow yield.
However, the German bank said it was still seeking greater clarity that these earnings will be delivered before turning more positive.
“As a result, we maintain our ‘hold’ rating with Avon remaining a least preferred name for 2021,” said Berenberg.
HSBC upgraded private hospital group Mediclinic to ‘buy’ from ‘hold’ on Thursday, hiking its price target on the stock to 340.0p from 280.0p.
The bank said Mediclinic’s South African operations were the least impacted during the first and second waves of Covid-19, which bodes well for the third wave.
“However, it’s the change in strategy that drives our upgrade,” HSBC said. “We finally think the company has moved away from saturating the international markets it operates in with the same type of capacity.”
It said Mediclinic treating the Swiss regulation-led moves to migrate procedures to outpatient to inpatient settings as an opportunity to realign resources and drive asset turnover is a positive outcome.
In addition, examining the use of remote monitoring to discharge patients early is an important step towards reducing the need to build out facilities at lower returns on investment.
HSBC noted that Mediclinic shares trade at one-year and two-year forward price-to-earnings discounts at 13.8x and 11.6x versus global peers at 22x and 18.2x, respectively.
Analysts at Liberum raised their target price on high performance polymers supplier Victrex from 2,300.0p to 2,800.0p on Thursday, stating that while a full recovery still appeared to by two years away, a special dividend now seemed “likely” in 2021.
Liberum updated its earnings estimates for Victrex by 12% following a better than expected recovery in the firm’s end markets since its last model rework earlier in the year.
The broker, which reiterated its ‘hold’ rating on the stock, also stated it believes that this fiscal year the company will end with £90.0m of cash on its balance sheet, triggering a special dividend payment. However, it noted that this was “not in consensus”.
“Despite this, we do not expect the business to stage a full recovery until FY23, as mix, currency and raw material inflation weigh on FY22 gross margin,” said Liberum. “This, coupled with still slow mega-programme conversion, prevents us from taking a more positive stance on the shares at this stage.”
