Liberum upgrades Clarkson to 'buy' after results

Liberum upgraded shipping services company Clarkson to 'buy' from 'hold' on Monday as it said its confidence in the short-term outlook has improved following in-line interim results and signs of firmer current trading.

The brokerage said results for the six months to June released earlier were as it expected, with a sharp fall in profits that reflected the quieter activity levels in sale and purchase broking and fewer investment banking transactions flagged in the April profit warning.

However, Liberum said it was encouraged by signs of a recovery in transaction volumes in sale and purchase markets. It said that while this was unlikely to be enough to recover the shortfall from the first quarter, it is encouraged that the improved performance required in the second half to achieve its forecasts seems feasible.

"We had made minimal changes to our overall estimates, but our confidence in the short-term outlook has improved. We remain confident in the longer-term potential to benefit from an eventual structural rebound in shipping markets."

The brokerage, which lefts its price target unchanged at 3,200p, said that a 2019E price-to-earnings of 20.2x offers value in the context of Clarkson's market leading positions, double-digit underlying earnings per share growth and upside risks to estimates as and when structural factors drive better freight rates and asset values.

At 1405 BST, the shares were up 10% to 2,843.50p.