Share Prices & Company Research

Market News

22 Feb 2021 | 15:00

Broker tips: Smith & Nephew, Glencore, Air Partner

(Sharecast News) - Analysts at Berenberg lowered their target price on medical equipment manufacturer Smith & Nephew from £20.05 to £19.85 on Monday, stating the group had sacrificed today "for a better tomorrow".

Berenberg said the resetting of margin expectations triggered by Smith & Nephew's recent full-year 2020 results and the release of 2021 guidance, while "painful", was also necessary.

Ahead of the results, Berenberg's 2021 trading profit and adjusted earnings per share estimates were already roughly 10% below consensus.

However, Berenberg stated that when one looks at the reasons behind the reset - Covid-19, foreign exchange, increased research and development investment and dilution from recent mergers and acquisitions - investors should be less concerned.

The German bank, which stood by its 'buy' rating on the stock, concluded that while short-term earnings expectations needed to reset, the medium- to long-term outlook for Smith & Nephew has "only improved" in its view.

JPMorgan Cazenove upgraded its stance on shares of miner Glencore on Monday to 'overweight' from 'neutral' and lifted the price target to 350p from 280p.

The bank noted that EMEA miners are cheap and high-yielding reflation proxies and said its economists have raised their 10-year yield forecasts to 1.65% by the fourth quarter of this year following the passage of a $1.7trn US fiscal stimulus package.

JPM said Glencore has the highest exposure to base metals and copper, at 40% of EBITDA, of the UK diversified miners and "upside risks prevail", including new supply risks to copper and nickel due to an accident at Norilsk over the weekend.

"At current metal prices we calculate $18bn of 2021E mark-to-market EBITDA and $9bn of free cash flow for 14%/16% FCF yield," it said.

"Backing out our circa $20bn equity value for commodity trading, at its $56bn market cap leaves its Industrial assets trading on just 2.5x 2021/22E EV/EBITDA."

Analysts at Canaccord Genuity slapped Air Partner's shares with a 'buy' rating on Monday after previously having the stock 'under review'.

Canaccord said Air Partner remained "well placed" to benefit from the long-term growth trends in aviation, stating its Charter and Safety & Security divisions would likely perform well as it emerges from the Covid-19 pandemic.

The Canadian bank added that, supported by a strong balance sheet, Air Partner would also likely continue to diversify its revenue streams and aviation services portfolio in the coming years, increasing its revenue visibility in the process.

"Applying a 15% premium to our EPS for FY23 equates to a price target of 100p," stated Canaccord.
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