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Broker spotlight: Ryanair, Anglo American, Weir, Rambler Metals, Advanced Computer...


Ryanair (LON:RYA) is right back in favour with City scribes today after its big profit upgrade yesterday. 

Credit Suisse has upped its target price by a meaty 18% to €10.30, with the broker suggesting the 2016 may been even better for the no-frills airline.

The broker has raised its estimate for net income this year by 7% to €782mln but expects 2016 to see a further €142mln (18%) rise driven by driven by an extra point of load factor (€64mln) and a 3% unit fuel cost saving (€47mln) protected by flat fares.

Citigroup has also raised its profits forecasts and valuation on the Irish carrier. The September quarter was slightly better than expected, it said, and the broker has raised its forecast for net income this year by 16% to €757mln from €654mln. A buyer, Citi’s new price target is €9.30 from €8.65 while on a cash flow metric its fair value price is €10.73.

Anglo American (LON:AAL) remains a buy for Investec after its latest seminar for diamond arm De Beers. The broker sees standout value in the diamond group, with the additional disclosure and further pieces of the puzzle provided yesterday enabling a better understanding of the group.

Greater details for each mine were provided, including carat values and grades, which will enable better understanding of the long-term workings of the business. This is a major step forward, but Investec said it would still have like to see mine by mine costs detailed.

Most notable is the potential value of the trading side of the business, which Investec believes masks the true profitability of the group as a whole, but with greater disclosure the market will now increasingly recognise the value of the business. 

It adds it is too early to say whether a spin out of the business will take place with management efforts focussed on delivering operational improvements and marketing diamonds to lift prices longer term, but Investec is a buyer of Anglo even so with a target price of 1,588p.

Investec, meanwhile, remains a seller of Weir (LON:WEIR) after its latest update. “The weakening oil price, below the incentive US gas price, and low commodity prices continue to provide downside risk to our forecasts and consensus for FY15, in our view. We maintain our 1900p target.”

Hose broker Cantor Fitzgerald remains upbeat on Rambler Metals & Mining’s (LON:RMM) progress. Annual results confirmed the "excellent start" copper miner Rambler has made to its life as a commercial mining company and the broker expects a  a similar level of performance in the current year. 

With execution risk now removed, the market can look at the company afresh, it said. There are growth options too. On this front, the Lower Footwall Zone at the Ming mine could be game changing. Cantor’s “first pass” NPV for this project implies a valuation of 32p/share, taking its overall NPV to 53p. 'Buy' with a target price of 50p, it recommends.

Advanced Computer Software (LON:ASW) has one of the strongest track records of profitable growth and cash generation in the software sector, N+1 Singer says. 

Latest results confirmed solid forward revenue visibility (63% recurring) and the group remains in a strong position to execute on its organic plan as well as acquisitions when the right opportunities arise.

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