On the whole analysts at Credit Suisse have a favourable opinion of the final results posted today by Smiths Group. They thus describe the company´s second half performance as ‘solid,’ while highlighting the 10% top line growth and 19.2% margin achieved.
Nevertheless, they also take note of the company´s references to the ongoing macro uncertainty and the pressure on government spending, which led to some caution on the outlook for fiscal year 2013 (in particular for the second half of that year) and as a result, trim their forecasts for the next two fiscal years (2013 and 2014) by 2% an 1%.
Credit Suisse also calls attention to the fact that the ‘focus of the group is now shifting towards generating top line growth, primarily through 1) investment in new products and 2) expansion in growth markets.’
That now that the main restructuring program has been completed.
Credit Suisse analysts have reiterated their outperform recommendation on shares of Smiths, as well as their 1,200p price target.
Credit Suisse has issued a very bullish research note today on the shares of plant hire firm Ashtead. More specifically, its analysts cite several factors which, when combined, make the company their favourite in the sector. Additionally, they indicate that the company faces minimal downside risks based on their HOLT model.
For all of the above reasons they have decided to raise their price target on its shares to 400p from 316p beforehand, while reiterating their outperform rating.
This despite the 149% rise in its stock price over the last twelve months, which has seen the company´s share price outperform by no less than 120%.
In particular, they cite two reasons for the above. First of all, they highlight the fact that the structural shift to renting from owning construction equipment in the US is on track. In second place, the company has started to improve the profitability of its UK operations.
‘Positive’ risk-factors to watch out for are the possibility of a mild winter and the fact that their US EBITDA margin targets (39% estimated for this year and 41% in FY14E) remain substantially below management medium term guidance of around 45%.
Nomura has this morning downgraded its view on the shares of do-it-yourself retailer Kingfisher to neutral from buy.
This as housing starts in France have been declining since the start of the year, which should weigh on Brico’s performance, thus creating uncertainty around near-term trading for the business.
Furthermore, and across regions, ‘improvements in discretionary spend have been few, with significant recoveries unexpected near term,’ the broker says.
For all of the aforementioned reasons, and the resulting limited visibility in the near-term, they expect the stock to continue trading below their discounted cash flow (DCF) valuation of 338p. Rather, they believe it will trade more in line with its 12x price-to-earnings multiple, hence their downgrade and the reduction in the price target to 287p from 328p before.
Tags: broker tips | credit suisse | downside risks | government spending | holt | kingfisher | price target | share price | twelve months | year 2013