Broker tips: Informa, Petropavlovsk, Compass Group
By Iain Gilbert
Date: Thursday 17 Sep 2020
(Sharecast News) - JPMorgan Cazenove downgraded its stance on shares of Informa to 'neutral' from 'overweight' on Thursday and slashed the price target to 389.0p from 528.0p as it waits for business travel to return.
JPM said it had previously seen Informa as an attractive recovery play and long-term structural growth story.
"However, from here we have doubts: while employees are increasingly returning back to their offices, long haul business travel remains subdued and we expect the events industry to suffer longer than initially anticipated," it said.
"While it is consensus that 2020 is a write-off for the space, we more and more anticipate cancellations also for H121 - causing further downgrades to consensus expectations."
The bank cuts its FY20/21/22 earnings per share estimates by 41%/31%/7%, largely driven by a weaker events business.
Analysts at Canaccord Genuity lowered gold miner Petropavlovsk to 'hold' from 'speculative buy' on Thursday, stating uncertainty still remained around its future.
With changes at the group's board level in August, including the departure of former chief executive Dr Pavel Maslovskiy, Canaccord said the tenure of the rest of Petropavlovsk's executive management team still remained "unclear".
"There has been a void of public information available about who the new board appointees and permanent executive management might be, and what (if any) changes to the previous strategy might be implemented," said the analysts.
"In the absence of any further clarity on the board, management team or strategy, we maintain our fundamental estimates, which are based on the previous board/management team's strategy, and which underpin our unchanged net present value-based 40.0p target price, " said Canaccord.
However, the Canadian bank stated that over the last month, Petropavlovsk's share price had moved up by around 20% and was now just 3% below its target price, leading to the downgrade.
Barclays upgraded catering company Compass Group on Thursday to 'overweight' from 'equal weight' and hiked the price target to 1,500.0p from 1,050.0p.
The bank said Compass is well-positioned to flex costs/contracts sufficiently to recover margins even if volumes remain permanently impaired; gain more share from smaller/weaker competitors; benefit from more first-time outsourcing in healthcare/education; and adapt the business to a digital/delivery model where relevant.
"Our price target is raised to 1,500p, reflecting forecast upgrades and a new valuation approach of 11.6x 2022e EV/EBITDA, which reflects both our enhanced confidence as well as a discount to prior levels for the structural challenges."
However, Barclays said this was a long-term call.
"Short term, the stock performance will likely be dominated by virus/vaccine/lockdown newsflow and we can't predict how that will look, but we do feel better about Compass' ability (more than its peers) to get back to its prior peak and again be a compounder."
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