Broker snap: Compass 'up with events' after strong performance, says Panmure

27th Nov 2013 09:14

Panmure Gordon has lifted its target price for catering company Compass after annual results came in better than estimated, but the broker maintained a 'hold' recommendation on valuation grounds."Compass Group has announced its full-year results to the end of September, with trading slightly ahead of our expectations," the broker said on Wednesday morning.Profit before tax increased by 9% to £1,188m in the 12 months to September 30th, above Panmure's £1,153m forecast. Earnings per share were up 12% at 47.7p, compared with the 46.2p estimate, while the 12% increase in the dividend to 24p was ahead of the 23.1p expected.Furthermore, the £500m announced share buyback was well above the £300-400m that Panmure was expected.The target price for the stock has been upped from 820p to 900p.The broker said that it expects to make minimal changes to next year's estimates, leaving the stock trading at 18.3 times earnings. However, with the valuation close to 10-year highs, organic growth set to slow and a limited chance of additional capital returns next year, it believes the stock is "up with events"."Following a strong performance from the Compass share price (one-month relative outperformance of 3%) and strong set of results today, we believe it could be time to take profits in Compass," Panmure said.The share price was 2.54% higher at 950p by 09:44 on Wednesday.BC