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(Sharecast News) - Analysts at Canaccord Genuity upgraded Volex to 'buy' from 'hold' on Tuesday, saying the shares now offered around 18% upside to its new 600p target price after pulling back from June highs.
Canaccord Genuity lifted its forecasts following Volex's move to take full ownership of Kepler SignalTek, alongside a reduction in the group's share buyback from 40m to 20m to preserve M&A flexibility. Canaccord said acquiring the remaining 64.3% of KST for up to $89.4m looked a "sensible, derisked and capabilityled" deal that extends Volex's medical offering into patientconnected products, with margins ahead of the group and expected to clear the firm's more than 15% return on capital expended hurdle within two years.
The Canadian bank highlighted the deal's crossselling potential given limited customer overlap, and said Volex's bluechip healthcare relationships should accelerate growth. The deal will be funded through existing facilities, taking proforma leverage to around 1.1x. It also noted Volex's decision to scale back its buyback ahead of its move to the Main Market on 24 July.
Canaccord, which nudged its target price on the stock up from 590p to 600p, raised its adjusted operating profits forecasts by 5 to 6% across FY27-29, assuming 10% KST revenue growth and a 15% margin. Net bank debt was now expected to rise to about 215m in FY27, with leverage easing to 1.0x by FY29.
Canaccord said Volex's valuation at roughly 15x CY27E P/E and 9x EV/EBITDA remained below peer medians, and reiterated its view that the stock's strategy and growth track record justified its upgraded stance.
JPMorgan lifted its price target on Marks & Spencer on Tuesday to 450p from 440p as it reiterated its 'overweight' rating, arguing that the group's turnaround was gaining traction.
The bank said M&S has a clear, quantifiable opportunity to close a meaningful portion of its online margin gap in Fashion, Home & Beauty (FH&B) as the Lichfield distribution centre ramps.
JPM said it had identified three tangible building blocks to around 400 basis points of FH&B online margin upside, leading it to lifts its FY29 group pre-tax profit forecast by 6%.
"This leaves us low single digit percentage ahead of Bloomberg consensus on group profit before tax, and 6%/ 5% higher on FH&B/ Food EBIT," the bank said. "We do not view this as the maximum margin improvement available, nor the only opportunity in the business - but we are comfortable embedding this upside given the tangible building blocks laid out in detail in this note.
JPM also said the valuation remains undemanding, noting that M&S trades on 10.7x CY27 price-to-earnings, which is around 7% below its five-year pre-pandemic average, despite materially better turnaround visibility.
"We raise our Mar-28 multiples-based TP to 450p (from 440p), applying a circa 13x multiple (a 10% premium to the pre-pandemic average) to reflect our view that the turnaround is regaining traction," it said.