Canaccord Genuity slightly lowers target price on Begbies Traynor

23rd Feb 2022 09:26

(Sharecast News) - Analysts at Canaccord Genuity lowered their target price on corporate restructuring specialists Begbies Traynor from 163.0p to 138.0p on Wednesday to better reflect current market conditions.

Canaccord Genuity said Begbies Traynor's third-quarter update indicated that its trading performance throughout the period was "broadly in line" with the first half of the year.

The Canadian bank, which has a 'buy' rating on the stock, also stated the latest UK insolvency market statistics showed that while the quantum of insolvency appointments had recovered to pre-pandemic levels, administrations, which were typically larger, more complex and involved higher value instructions, still remained "significantly below" pre-pandemic levels.

Given the length of time to the firm's April year-end, Canaccord said any recovery in larger appointments was more likely to benefit its 2023 earnings than 2022 but added that the removal of the final government support measures for businesses in respect of the Covid-19 pandemic back in March and the "currently challenging economic outlook" should be helpful for improving volumes.

"Our previous forecasts had reflected a stronger recovery in these higher-value instructions than has transpired to date. Therefore, we now forecast adjusted pre-tax profits in FY22E of £17.2m (previous: £18.5m), with the reduction driven largely by business recovery and advisory," said Canaccord. "Our new adj. PBT estimate is at the lower end of the indicated consensus range (£17.0-18.5m) which management remains confident in delivering. We forecast 49% adjusted pre-tax profit growth year-on-year, which is largely driven by the successful integration in particular of the acquisitions of CVR, DRP and MAF."