Berenberg raises target price on Senior
Analysts at Berenberg hiked their target price on aerospace and defence outfit Senior from 50.0p to 85.0p on Tuesday but noted that although the group was "on steadier footing", its recovery path still remained "unclear".
Berenberg updated its forecasts to reflect Senior's full-year 2020 post-close trading update earlier in January, as well as higher land vehicle estimates for 2021, resulting in 15-24% upgrades to its analysts' earnings forecasts.
"It is clear that the worst is now behind Senior, but as we have said before, the shape of the financial recovery remains unclear to us and we remain cautious about the near-term challenges," said Berenberg.
The German bank noted that with the stock rallying by 124% since their September lows, aided by positive vaccine news and the "ungrounding" of Boeing's 737 MAX, it does not "feel inclined to chase them here" and opted to maintain its 'hold' rating on its shares.
"We expect that higher Flexonics revenues will be offset by lower Aerospace revenues, resulting in no material change to our group revenue forecast," said Berenberg.
"However, the mix change together with a modest increase in our Aerospace margin assumption (+25bp) results in a £2.0m uplift to our adjusted operating profit (to £3.0m from £1.0m). This flows through to our adjusted PBT which is increased to -£9.0m from -£11.0m previously, resulting in a 16% upgrade to our earnings estimate."