Broker snap: Market share growth to drive Genus

5th Jul 2010 13:07

The second half was better than the first at Genus and with currencies also moving in the company's favour KBC Peel Hunt thinks the animal breeding firm is set for a stronger performance in the current fiscal year."Global agriculture is starting to recover as pricing and demand is improving in a number of areas. This is increasing farmers' confidence and thus their demand for animal genetics. In particular, the US hog market has seen strong prices and Genus has benefited from customers looking to upgrade their genetics as well as winning new business. Elsewhere, Genus is making strong progress in Latin America and shipments of bull semen to China are encouraging," KBC analyst Charles Hall notes, though the group is not yet firing on all cylinders."The bovine market in the US is still weak as milk prices have only partially recovered. Pig prices in China have also remained low and Australia is yet to recover from drought. If these areas turn positive, then we would expect to see an acceleration in underlying performance," Hall said.The broker rates the shares a "buy" and has a price target of 800p. "Genus should see strong growth driven by gains in market share, growth in emerging markets with the potential for step changes in profits through technology," the broker concludes.Panmure Gordon, meanwhile, has upgraded its fiscal 2011 profit before tax forecast to take into account favourable currency movements. It is now forecasting profit before tax of £32m, up from £31m. It too has a price target of 800p and a "buy" recommendation.