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(Sharecast News) - RBC Capital Markets cut its price target on DCC on Monday to 5,200p from 5,400p as it tweaked forecasts to reflect a lower valuation for DCC Technology, given weaker trading and macro uncertainty.
"Hence we see less upside than previous, but given a lack of value elsewhere at the defensive end of the sector, we remain at outperform, ahead of the cash return," the bank said. "However, this is certainly not a table thumper."
RBC said its adjusted EBITA forecasts move down around 1%, bearing in mind that it had already brought its DCC Technology forecasts down ahead of numbers to reflect tough trading and tariff uncertainty.
The bank said its earnings per share changes are immaterial but will be sensitive to the exact timing and price of the 100m buyback and 600m cash return. It assumes completion by mid financial year at the current share price.
RBC said the key sensitivity remains the value the market ascribes to DCC Energy.
"Greater disclosure is helpful, but there is a risk that the market continues to struggle to value it as DCC Energy is somewhat of a conglomerate and a unique proposition in itself," it said.
"Hence, there is a risk that a full break-up may be the only way to demonstrate value over the medium-term, in our view."
At 0945 BST, the shares were down 1% at 4,760p.
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