Barclays starts Coats at 'equalweight', RWS at 'overweight'
By Michele Maatouk
Date: Friday 18 Jan 2019
(Sharecast News) - Barclays initiated coverage of Coats Group and RWS Holdings on Friday.
It started thread manufacturer Coats at 'equalweight' with a 75p price target, saying the company has a strong position in the thread market and has the potential to drive earnings from cost-cutting a large opex budget and providing global scale to bolt-on acquisitions.
"We initiate at EW as we are cautious on 1) the outlook for top-line growth which limits long-term earnings growth and 2) exceptionals which are still around 10% of EBIT."
The bank also initiated coverage of intellectual property support services provider RWS Holdings at 'overweight' with a 560p price target.
"We think the combination of capital-light businesses (10x capital turnover) with high and defensible margins (circa 2%) in end-markets offering long-term mid-single-digit topline growth makes RWS an attractive investment and justifies its premium valuation," it said.
At 1335 GMT, Coats shares were down 1.4% to 83p and RWS was up 3.3% at 465p.
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