Broker snap: Dechra upgraded to 'buy' on bright outlook, says Investec

23rd Sep 2013 10:08

Veterinary pharmaceuticals group Dechra Pharmaceuticals booked more than a 50 per cent increase in full year revenue, slightly ahead of our expectations, said Investec.Turnover from both continued and discontinued operations climbed from £440m to £522.4m, while underlying pre-tax profit rose from £32.9m to £44.6m in what the company described as a 'momentous' year.Underlying diluted earnings per share jumped from 32.27p to 38.71p.Dechra said it had been a strategically important year with the successful integration of Eurovet, acquired in May 2012, and with the transformational effect of the £87.5m divestment of the Services businesses."Whilst our forecasts still have Dechra delivering 11% earnings per share growth in fiscal year 2014 we think the risk remains to the upside given the opportunities on offer for the company," explained Investec."We perceive Dechra as a unique investment on the UK stock market. It has no listed peers of the same size serving the same, defensive, end markets," said Investec.Investec moved Dechra to 'buy' from 'add' and lifted its price target rise to 788p from 708p, citing the likelihood for Dechra's earnings to accelerate ahead of Investec' forecasts."With the disposal of Services completed, management can now employ a more focused strategy that should deliver enhanced results in terms of growth. With the funds to execute on inorganic opportunities, we think Dechra is well positioned for the future," Investec added.Shares rose 3.4% to 718.50p at 10:35 on Monday.CJ