Broker tips: Computacenter, Gresham House, Just Eat
By Iain Gilbert
Date: Monday 27 Jan 2020
(Sharecast News) - Analysts at Berenberg upgraded Computacenter to 'buy' on Monday, stating they'd previously slapped the group with a 'hold' rating "too early".
However, Berenberg reassessed its view after recent trading, saying it was now "much more confident" about the company's long-run growth outlook.
"The US business has turned a corner, Germany remains very strong and the UK is making margin progress," said Berenberg.
The German broker also noted that heading into next year, structural tailwinds looked set to persist and early attempts at cross-selling between the US and European businesses were seemingly on track to improve.
"Computacenter trades at a significant discount to its peers and has the scope to outperform our numbers via numerous channels," said Berenberg, which also upped its target price on the firm's shares from 1,500.0p to 2,150.0p.
Berenberg also highlighted that the firm's guidance needed to "be taken with a pinch of salt" as it suggested only a 3% earnings per share compound annual growth rate - the same guidance that management gave three years ago, even though Computacenter has delivered a roughly 20% EPS CAGR since then.
"Guidance is therefore notoriously conservative. Our base case estimates reflect management's expectations but, with structural growth ahead, an improving macroclimate in the company's UK and German markets, and the US business making major progress, we think there is upside to our numbers."
Analysts at Canaccord Genuity reiterated their 'buy' recommendation and target price of 801.0p for shares of Gresham House following the alternative asset manager's pre-close trading update.
In particular, the Canadian broker hailed the rate of increase in the firm's funds under management on an organic basis in the back half of 2019 which it said suggested upside versus its own forecasts.
"As well as its ESG attractions, the alternative, uncorrelated nature of its real assets exposure means that GHE occupies more than one structural sweet spot, in our view, and should continue to take advantage of increasing allocations," analysts Justin Bates and Portia Patel said in a research note sent to clients.
It was that lack of correlation to which they attributed the fund manager's FuM growth.
From a valuation point of view, at 21.8 times their estimate of the firm's earnings for calendar year 2020, the share price did not "fully recognise" the inherent value of the business, the analysts also said.
The then-current share price also suggested that investors needed to take into account the company's strong balance sheet.
Their target price of 801.0p was based on an average of the estimated end-2020 EV/EBITDA multiple for the firm of 20.0 together with 1.0 times the company's estimated end-2020 net cash and realisable assets (target value: 909.0p), and 1.0 times its end-2020 net asset value plus 4.0% of its end-2020 FuM (target value: 694.0p).
Analysts at Barclays mechanically upgraded food delivery group Just Eat to 'overweight' on Monday ahead of the group's relaunch as Just Eat Takeaway on 31 January.
Barclays said it was "not too concerned" about the last-minute investigation into the group's merger with Takeaway.com by the Competition and Markets Authority, stating that while it was surprised by the move, it still expects approval and asset integration to "happen quite fast".
The bank highlighted that value was "well underpinned" in Takeaway given its "clear leadership positions", underlying earnings ramping up very quickly in Germany, medium-term potential to increase take rate and the recent launch of B2B.
"But we also see scope for value accretion in JE from potential asset sales, consolidation and turnarounds," said Barclays, which started conservatively when it came to its valuation of Just Eat's European assets.
"Our base case pro-forma JET SOTP leads to a PT of €100 on TKWY, and 1,018p on JE. Our upside case is €145/1,476p - we show a bridge inside as to the levers of this upside. Downside of €70/713p if European turnaround doesn't happen. This story has lots of SOTP optionality."
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN