Broker snap: Jefferies upgrades Morgan Advanced Materials to 'buy'

25th Jul 2013 08:29

Jefferies has upgraded its recommendation for Morgan Advanced Materials from 'hold' to 'buy', saying that the diversified materials business is potentially at a turning point.The company, which manufactures products from medical instruments, aerospace and satellite communications components, to body armour, trains and fire protection systems, delivered its first-half results on Thursday which were "very much in line with our forecasts", according to Jefferies.Sales and profits were sharply lower year-on-year, but the broker said this was expected given challenging underlying markets and soft momentum from trading in the second half of 2012."In truth, we are kicking ourselves for not turning more positive when the shares were c260p, but we still believe there is attractive potential upside from these levels. The group's valuation is attractive looking out to FY14, in our view, and that there are a number of good businesses within Morgan," Jefferies said."We have arguably not taken as positive a stance in respect of FY14 forecasts relative to others, but there are signs that Morgan is turning the corner and 'One Morgan' is moving forward successfully. It's early days and there is more to be done, and a macro pick-up could be the next catalyst to the story, we believe."The target price for the stock has been raised from 320p to 345p.BC