| CATEGORY: BROKER RECOMMENDATIONS SECTOR: SUPPORT SERVICES |
Broker snap: Brokers queue up to praise Mears |
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Tue 09 Mar 2010
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LONDON (SHARECAST) - Results from social housing maintenance specialist Mears held few surprises, according to KBC Peel Hunt, but ‘the outlook statement remains positive across the key operations,’ the broker said.
‘As a consequence of these strong underlying results we remain comfortable with our earnings projections and believe the market opportunity remains significant and robust across the key areas of operations,’ KBC analyst Andrew Nussey said.
‘Furthermore, the continuing order book intake and pipeline has mitigated one of the lingering concerns albeit we would like to see increased wins from new relationships. Therefore, with 20% average EPS [earnings per share] growth projected for FY 2010 [fiscal 2010] and FY 2011 [fiscal 2011], upside potential from the acquisition of Supporta and the shares trading on 9.8x FY 2010E [estimates fiscal 2010] earnings, we reiterate our BUY,’ Nussey added.
KBC Peel Hunt has a target price of 325p for the stock.
Charles Stanley is also a fan of the stock. ‘In our view, Mears is in an excellent position to benefit from further outsourcing opportunities, and a 25% discount to the wider sector is unwarranted,’ the broker maintains.
‘The group has a strong order book, is exposed to defensive markets with growth opportunities, and has an excellent pipeline of bidding opportunities,’ Charles Stanley analyst Matthew Earl notes. The broker has a 358p target price for the stock.
Also in the Mears fan club is Panmure Gordon, though its price target is lower than Charles Stanley’s at 330p, based on a sum of the parts valuation.
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