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Berenberg raises target price on Scapa
23rd Jun 2020 12:05
(Sharecast News) - Analysts at Berenberg slightly raised their target price on healthcare and industrial group Scapa from 140.0p to 150.0p on Tuesday, stating the firm's 2020 numbers were better than it had anticipated.
Berenberg noted that Scapa's full-year revenue and cash generation performances came in ahead of expectations, while trading profit was in line with forecasts.
However, the analysts said few investors appeared to be focused on Scapa's full-year numbers and were more concerned about the continuing impact of Covid-19.
While Berenberg said trading in the first quarter of the group's 2021 trading year was better than expected so far, the analysts highlighted that Scapa itself had cautioned that the pace of recovery was "a little slower than it anticipated".
"In effect, rather than a shorter and steeper fall we now forecast a slightly longer but shallower decline before a more pronounced recovery in Q4," said Berenberg.
Either way, the German bank said the end result was the same and keep its trading profit forecasts for 2021 unchanged, except for earnings per share which fell to reflect equity dilution.
"While there are many stocks in the 'recovery category', in our view Scapa has far more improvement potential and a greater likelihood of achieving it than many we see elsewhere," concluded Berenberg, which reiterated its 'buy' rating on the group.
Berenberg noted that Scapa's full-year revenue and cash generation performances came in ahead of expectations, while trading profit was in line with forecasts.
However, the analysts said few investors appeared to be focused on Scapa's full-year numbers and were more concerned about the continuing impact of Covid-19.
While Berenberg said trading in the first quarter of the group's 2021 trading year was better than expected so far, the analysts highlighted that Scapa itself had cautioned that the pace of recovery was "a little slower than it anticipated".
"In effect, rather than a shorter and steeper fall we now forecast a slightly longer but shallower decline before a more pronounced recovery in Q4," said Berenberg.
Either way, the German bank said the end result was the same and keep its trading profit forecasts for 2021 unchanged, except for earnings per share which fell to reflect equity dilution.
"While there are many stocks in the 'recovery category', in our view Scapa has far more improvement potential and a greater likelihood of achieving it than many we see elsewhere," concluded Berenberg, which reiterated its 'buy' rating on the group.