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15 Jan 2021 | 09:38

Canaccord Genuity raises target price on Lamprell

(Sharecast News) - Analysts at Canaccord Genuity raised their target price on oilfield services provider Lamprell from 55.0p to 90.0p on Friday following the group's year-end trading statement. Canaccord highlighted that cash flow, in particular, had performed well and that the firm had closed 2020 with a net cash position of $112.0m - more than $40.0m up on the end of June.

The Canadian broker said Lamprell's backlog of $520.0m was solid, despite no Saudi LTA contract yet appearing, with roughly $455.0m expected to be executed in 2021, underpinning its forecasts for 2021.

Most significantly for Canaccord, Lamprell has formally stated a "strategic reorganisation" as the group "continues to explore how best to finance" certain business units going forward, which it reads as indicating the possibility of splitting the higher-growth renewables and digital units from profitable but low-growth oil and gas operations.

"We are moving our price target up to reflect the possibility of this split, and the valuation uplift to those higher-growth units that we think is likely as a result," said Canaccord, which kept its 'buy' rating on the stock.
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