Analysts at Canaccord Genuity raised their target price on electronic connectors manufacturer Volex from 475.0p to 500.0p on Friday following the group’s acquisition of Irvine Electronics.
Canaccord said the acquisition of Irvine Electronics strategically enhanced the firm’s North American IMS offering by adding capacity and technical know-how on the West Coast while strengthening its presence across attractive defence, military, aerospace and medical markets through a blue-chip customer base.
The Canadian bank, which stood by its ‘buy’ rating on the stock, adjusted its estimates for Volex in order to reflect the acquisition, factoring in a 4.5-month contribution for the 2022 trading year.
“As a result, we see adjusted pre-tax profits increase $900,000 to $51.6m in FY22E, before rising $2.8m to $58.3m in FY23E and $3.1m to $63.7m in FY24E. This drives EPS accretion to our estimates of 1.8%/5.1%/5.0% for FY22E/23E/24E respectively,” said the analysts.
Over at RBC Capital Markets, analysts decreased their target price on energy services provider Hunting from 300.0p to 275.0p on Friday after the group issued lower-than-expected full-year underlying earnings guidance.
RBC Capital said Hunting’s interim results were “broadly in line with expectations” and reflected ongoing trading challenges stemming from the Covid-19 pandemic and a and slower-than-anticipated recovery in oil and gas spending by its customers.
However, while Hunting’s Titan revenues recovered “slightly more quickly than anticipated”, its performance in the Asia Pacific region and Europe, Middle East and Africa were both weaker.
RBC Capital, which maintained its ‘sector perform’ rating on the stock, stated Hunting had suffered continued caution in its customer base into the third quarter and now expects full-year 2021 EBITDA to be around $10.0m lower year-on-year – roughly $10.0-15.0m lower than the analysts previous expectation and consensus.
Barclays upgraded Babcock to ‘overweight’ from ‘equalweight’ on Friday, lifting the price target to 424.0p from 315.0p.
The bank said that following the FY20 restatement, £2.0bn impairment, accounting policy changes and forthcoming disposal proceeds to mitigate balance sheet risk, Babcock looks set to generate meaningful cash flow from 2024, “returning as an attractive income play”.
“An active M&A environment has reduced investor options for UK Aerospace & Defence exposure (Cobham, Ultra Electronics, Meggitt), and Babcock may therefore benefit from new inflows as it executes its new strategic roadmap.”
