Broker snap: Guidance impresses at Bodycote

27th Apr 2011 13:38

Broker Prime Markets sees further upside to its target price for thermal processing services firm Bodycote, after a strong performance in the first quarter.The group reported a 19.2% rise in revenues for the three months ended 31 March, with trends seen in the second half of 2010 having continued into 2011. The board currently expects headline operating profit to come in at the top-end of forecasts (range is £55.5-76.6m)"Anyone buying into Bodycote in the depths of the credit crunch at sub 100p levels in late 2008 will be sitting on a near 400% return now, as the shares have almost without interruption remained in growth mode since that time," said Prime Markets' head of dealing Richard Curr.Curr notes that share spiked sharply higher in early trading on Wednesday, "breaking through the top of the trend channel at 355p", and provided that the stock closes above this level, shares could push higher to its target price of 390p within seven to ten days.Prime Markets rates Bodycote an 'ongoing buy', and notes that the shares could reach 420p in the run up to its interim results in July.Broker finnCap has also reiterated its optimism, keeping hold of its 'buy' rating and 408p target price."Guidance is raised significantly - towards the top end of the previous range - and accordingly we increase our pre-tax profit forecast by £10m to £68.3m," said analyst David Buxton."With a 17% increase in forecasts we see the shares reacting well, and we remain 'buyers' of the stock as an operationally geared recovery play," said Buxton.---bc