Broker snap: Analysts race to update Bodycote forecasts

13th Oct 2010 10:52

Brokers are scurrying to bump up their full year earnings estimates for Bodycote after a strong third quarter update from the engineering firm.Improved operating profit has forced FinnCap to increase its estimates, adjusting pre-tax profit from £34.1m to £41.1m, bumping earnings per share up 20% from 13.3p to 16p.FinnCap has also increased its 2011 forecasts for the UK company by £10m to £53.3m, with a 4p increase in earnings per share to 21p.Bodycote noted that operating profits for the year are now expected to be towards the upper end of the market range. With FinnCap at the lower end of that range it had little option but to "significantly increase" its forecasts."Momentum appears to have returned to nearly all the group's main markets and its historically strong operational gearing is coming into play," the broker said as it increased its target price to 318p and reiterated its "buy" recommendation.Panmure Gordon is also a buyer of the stock and though it only raised its earnings before interest and tax forecast for 2010 to £47.2m a week ago "we believe that there may be yet further upside", the broker said. The broker has a 345p target price for the stock. Operating on a global scale, Bodycote serves a range of industries including aerospace, defence and construction. "Automotive momentum has continued, trucks are strong, and there are early signs of a pick up in the higher margin Aerospace & Defence work," noted Panmure analyst Oliver Wynne-James ahead of Bodycote's conference call with investment analsts.