Broker tips: James Fisher and Sons, Trainline

12th Sep 2024 15:27

(Sharecast News) - Canaccord Genuity has cut its rating for James Fisher and Sons from 'buy' to 'hold', saying that the marine engineering services group still has a long way to go in its turnaround.

The broker left its 375.0p target price for the stock unchanged, but pointed out that the shares were trading close to one-year highs, making it a "less compelling risk/reward".

"Fisher has achieved a lot in the past 12 months: the business has been stabilised, the debt has started to be dealt with and the number of 'problem children' in the group is sharply down," said Canaccord.

The Canadian bank stated Fisher's H1 results demonstrated that whilst there was a path to improvement, it was "still some distance away" from the target of 15% return on capital and there were "some hints of the capital needs" to get there.

"We expect the next step in performance to require demonstrating further organic growth, not only from the successful units - bubble curtains, commercial diving and subsea rescue - but also from some of the more challenged units," concluded Canaccord Genuity.

Analysts at Berenberg raised their target price on digital rail and coach ticketing platform Trainline from 460.0p to 475.0p on Thursday following the release of the group's H1 trading update earlier in the morning.

Trainline said group net ticket sales increased by 14% year-on-year, while revenue grew 17% on a constant-currency basis, both of which were in excess of the top end of its FY25 guidance range.

In terms of the full-year outlook, Trainline expects net ticket sales and revenue growth to be towards the top end of the range and also anticipates adjusted underlying earnings to be in excess of the range.

"We increase our FY 2025E revenue, adjusted EBITDA and adjusted EPS forecasts by 2%, 7% and 9% respectively. Our forecasts were in line with consensus prior to this update," said the German bank, which stood by its 'buy' rating on the group.

"Trainline's shares are trading on 18x FY 2025E price-to-earnings and 9x FY 2025E EV/EBITDA. The shares are down by 7% year-to-date and are trading at a 26% discount to the two-year-average 12-month forward P/E. Trainline remains one of our top picks and we would highlight the shares' current level as an attractive buying opportunity."