Broker tips: Hunting, Informa, Intertek
By Alexander Bueso
Date: Wednesday 06 Jul 2022
(Sharecast News) - Analysts at Canaccord Genuity upgraded their rating for shares of Hunting from 'hold' to 'buy' following the recent sharp spill lower in the share price after the company posted its second quarter results.
In a research noted date 6 July, analyst Alex Brooks explained that the share price fall was due to investors' overly elevated expectations.
Consensus had been anticipating full-year 2022 earnings before interest, taxes, depreciation, and amortisation of $48-80.0m, whereas the company guided towards $45-50.0m.
Nonetheless, the oilfield services outfit's second quarter trading was described as "robust", what with a "strong" increase in the revenue run-rate for Q2, robust cashflow and an almost 50% jump in its backlog.
More importantly, Brooks said he was "increasingly confident in a multi-year cycle for the oil services industry, primarily due to nearly a decade of under-investment and an increasing near-term need for fossil resources."
He also noted that the company's "notoriously low visibility" meant that there might still be upside to its 2022 numbers.
Brooks did however keep his target price unchanged at 300.0p.
Analysts at Bank of America reiterated their 'buy' rating and 740.0p target price for shares of British publishing and business intelligence outfit Informa.
Heading into the group's 28 July first half results, they said industry news-flow pointed to solid reopening momentum in events, tentative movement on easing lockdowns in China and a number of tailwinds as far as the 2023 outlook was concerned.
They also cited valuation, arguing that on a calendar year enterprise-value-to-earnings before interest, taxes, depreciation and amortisation of eight times' the shares were "adequately" pricing in the risks.
Other reasons cited for their bullishness included the publisher's pursuit of a re-rating through digital events, growth via global re-opening and optionality in terms of potential mergers and acquisitions or shareholder returns thanks to a strenghtened balance sheet.
Informa was also on BofA's "What's big in SMID" list of top ideas.
Jefferies downgraded Intertek on Wednesday to 'hold' from 'buy', citing near-term exposure to China, broader macro challenges and deteriorating consumer confidence, which it said increases uncertainty given the company's higher exposure to consumer testing.
As a result we see risks that performance may lag peers though to FY23," it said.
"Intertek shares trade on 19.3x FY23 price-to-earnings, a circa 10% discount to peers, suggesting concerns may be priced in (albeit on free cash flow yield it is more in line on our estimates), but we see limited catalysts to change this view near-term and thus a more balanced risk-reward."
Jefferies slashed the price target on Intertek to 4,700p from 6,650p.
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