Senior surges after double upgrade at Barclays

15th Jul 2022 10:14

(Sharecast News) - Senior surged on Friday after Barclays upgraded the shares to 'overweight' from 'underweight' and lifted the price target to 183p from 137p.

The bank said that despite Senior's 17% absolute underperformance year-to-date, near term, the stock still looks somewhat expensive.

"However, with 2020 trough earnings now firmly behind, restructuring activities completed and delivering run rate savings, 2022 begins a meaningful recovery to normalised earnings and free cash flow.

"Our preference for OE versus AM remains, as narrow body (NB) rates increase off the bottom and AM-stocks have outperformed relative to OE," it said.

"Q1 aero results saw companies maintaining guidance despite supply chain, inflation and China risk, and we continue to believe the relative performance of the subsector is likely to remain tightly correlated to the rate of recovery in global flight activity (which is seeing signs of China coming off its lows) and forward earnings revisions (which we expect to accelerate into H2)."

Barclays said the new target price implies 50% upside to current levels.

At 1110 BST, the shares were up 7.1% at 126.80p.