Broker tips: Synthomer, Sanne, Greencore
Analysts at Canaccord Genuity trimmed their target price for shares of Synthomer due to the expected hit from the Covid-2019 virus and after pushing back the expected completion date for the acquisition of Omnova from 1 January to 1 April.
One small positive for the company from the Chinese coronavirus would be increased short and medium-term demand for the styrene-butadiene rubber that it manufactures, which is used in gloves.
But that effect would be more than swamped by the negative effects of the virus on its other businesses, analyst Alex Brooks said in a research note sent to clients.
Brooks also noted the "mixed" industry commentary as regards the first quarter, pointing out that energy appeared to be "markedly weak".
Jefferies kicked off its coverage of Sanne with a 'buy' recommendation and 735.0p target price, highlighting to clients the company's improving execution and the attractive fundamentals of the industry in which it operated.
In particular, the company offered investors a way to profit from the trend towards de-equitisation - as public companies are taken over by private equity - and increasing allocations to alternative assets.
The broker put Sanne's addresable market in alternative fund administration services and hedge funds at $6.0-7.0bnm predicting that it would grow at 10.0% a year on the back of an increased regulatory burden in Europe and higher penetration by outsourcers in the States.
It also enjoyed high barriers to entry and clients were "sticky", said Jefferies.
Berenberg has upped its rating on Greencore Group, arguing that the convenience food manufacturer remains under-appreciated despite exiting the burdensome US market.
The bank now has a ‘buy’ rating on the Irish company, up from a ‘hold’, and has increased its price target to 285p from 250p.
It said: “Last year, Greencore transitioned from a multinational business whose US expansion ambitions were its main selling point, to an almost entirely UK company focusing on the food-to-go sector.
“We believe this simpler set up represents an attractive proposition, as Greencore is strongly aligned to a structurally growing market, the more straightforward structure creates opportunities for market improvement, and cash generation should be considerable.
“In our view, these positive traits are under-appreciated at the current valuation and we therefore upgrade the stock.”