Canaccord Genuity raises target price on Clarkson

5th Mar 2024 16:13

(Sharecast News) - Analysts at Canaccord Genuity raised their target price on shipping services firm Clarkson from 4,325.0p to 4,500.0p on Tuesday after the group delivered a 23% incremental pre-tax profit margin in FY23, lower tax, and a dividend per share of 102.0p with still sizeable net free cash balances at end of the trading year.

Canaccord Genuity said the opportunity it saw was that Clarkson shares deliver just a 13.1x year-ahead price-to-earnings ratio versus the previous lowest quartile 15.6x and pre-Covid median PER at roughly 19.7x.

"As Clarkson enters FY24E, DPS progression, growing net free cash, and scope to repeat 2023's profit improvements are all potential catalysts ahead," said Canaccord.

"Prospects tend to strengthen as the calendar year matures - helped as profit-compounding factors intensify from the company's investment in colleague teams (e.g., more broking experts), improved technology (like Sea/), and upside from bolt-on M&A."

The Canadian bank, which reiterated its 'buy' rating on the stock, thinks that its sizeable free cash differentiates and enhances the value of Clarkson by adding confidence to counterparties and employees, as well as strong foundations to continue dividend progression.

Canaccord added that improving return on equity and cash added to potential upward pressure.

Reporting by Iain Gilbert at Sharecast.com