Broker tips: Alpha FX, Tyman, Kainos
Analysts at Liberum hiked their target price on shares of Alpha FX after the currency management specialist reported a more than tripling in profits at the half-year stage.
Earlier in the session, the firm posted a 214% surge in its profits before tax, alongside an improvement in underlying margins to 45%.
According to the analysts: "These results clearly demonstrate the group's ability to expand rapidly and profitably into new areas and geographies, and deliver to plan.
"Backed by a strong balance sheet and corporate culture, we expect Alpha FX to continue to successfully expand the scope of its business in future periods as well."
Having already raised their estimates for the company by more than 12% after a trading update in July, they now kept them unchanged.
Nonetheless, judging their forecasts to still be "conservative", they raised their target price from 1,800.0p to 2,000.0p and kept their recommendation at 'buy'.
Berenberg upgraded its stance on shares of building products manufacturer Tyman to 'buy' from 'hold' on Wednesday and hiked its price target on the stock to 500.0p from 375.0p, citing an attractive entry point.
The German bank noted that after a strong run over the past year, Tyman shares have pulled back 20% in recent months.
"We think the shares will outperform as management is focused on organic growth and margin expansion, the business is highly cash-generative with low leverage and potential for non-dilutive M&A, and it is supported by favourable macro tailwinds," it said.
Berenberg pointed out that historically, Tyman pursued an acquisition-led strategy, which contributed the vast majority of the revenue increase but also resulted in low organic growth.
"However, we think this is about to change. Management is now explicitly prioritising organic growth, installing a unified corporate culture and stepping up capital expenditure," said the analysts.
In the longer term, Berenberg said the structural undersupply of housing and ageing stock that has been underinvested in the US should underpin growth forecasts.
Analysts at Canaccord Genuity hiked their target price on software firm Kainos from 1,515.0p to 1,765.0p on Wednesday, stating margin normalisation now looked set to begin.
Canaccord stated that since its full-year trading results in May, Kainos shares had rallied more than 35% on little news flow, with the market in its view pricing in upgrades to conservative consensus growth expectations.
The Canadian bank also stated that today's first-half trading update delivered on these expectations, with its full-year 2022 sales growth estimates being raised from 10% to 21% on the back of "significant recent UK government contract wins" and "continued strong momentum" in its Workday Services unit.
"Our new estimates imply broadly flat EPS yoy in FY22E as the company continues to deliver sector-leading organic growth while digesting normalising staff utilisation and other incremental costs," said Canaccord, which also reiterated its 'hold' rating on the stock.
"Following the recent rally, Kainos' >50x P/E sits at the high end of the shares' historic trading range and also well above UK peers."