Broker tips: Everyman Media, Energean, AB Foods
By Iain Gilbert
Date: Monday 23 Jan 2023
(Sharecast News) - Analysts at Canaccord Genuity lowered their target price on cinema chain operator Everyman Media on Monday, stating that while the group had delivered a full-year earnings beat, growth trajectory for the coming two years had "moderated".
Canaccord Genuity said a solid end to 2022 had resulted in a 2% revenue and an 11% underlying earnings beat for Everyman, compared to its expectations.
However, whilst the analysts acknowledged there was "a solid pipeline" of new openings planned for the years ahead, they also said there had been "some slippage" in the phasing of anticipated openings and a forecast increase in utility costs once contracts expire, both of which resulted in a reduction of FY23E and FY24E forecasts
But the Canadian bank went on to say that the industry continued to recover post-pandemic and that the film slate for the year ahead looked "encouraging", with both the volume and quality of new releases set to significantly increase compared to 2022, which had a reduced slate due to pandemic film production delays.
"We continue to believe that Everyman's premium brand is strong and differentiated which, coupled with a robust balance sheet, reinforces our belief that the group is well positioned for future growth," concluded Canaccord Genuity, which reiterated its 'buy' rating on the stock.
Analysts at Berenberg lowered their target price on exploration and production company Energean from 1,750.0p to 1,580.0p on Monday, as a slower-than-expected ramp-up created cause for concern despite the company's solid cash flow story.
Berenberg said impediments to the ramp-up of Energean's key Karish project due to commissioning challenges on its floating production storage and offloading vessel were now "largely resolved", with commissioning expected to complete in February.
However, Berenberg pointed out that Energean's guidance was below consensus expectations and had a knock-on effect on its full-year 2023 numbers.
"We incorporate updated guidance with the net result a 10% decrease in our price target to 1,580p (from 1,750p), 24% upside from current levels," said Berenberg, which reiterated its 'buy' rating on the stock.
"On our updated forecasts, the shares are trading on FY23/34 EV/EBITDA of 4.5x/3.4x; EV/DACF of 5.4x/4.3x and FCF yield of 3%/25% respectively. Over the longer term, we forecast average a 2023-2030 FCF yield of 27%, more than covering the expected 14% dividend yield once production has ramped up."
Deutsche Bank upgraded its recommendation for shares of Associated British Foods from 'hold' to 'buy', judging that the headwinds from energy prices and foreign exchange rates were reversing.
In a research note sent to clients, analyst Adam Cochrane said ABF's guidance for the 2023 trading year was given at "a relative low point for GBP strength" and that energy headwinds had "reduced significantly".
The German bank highlighted that AB Foods' Primark unit was likely to see margins improve, with the retailer benefiting from both trading down and new space growth.
Deutsche Bank also pointed to the AB Foods' "robust" balance sheet and ongoing share buybacks to support its upgrade.
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