The Expert View: Hilton Food Group, Stock Spirits, Cranswick
A roundup of analysts' commentary on shares, also including Senior and Clean Air Power.
Peel Hunt upgrades Hilton Food Group on Tesco deal
Peel Hunt has upgraded meatpacker Hilton Food Group (HFG.L) from 'hold' to 'buy' after it won a major contract with Tesco.
Hilton currently supplies about half of Tesco's beef, and the five-year deal that's been agreed should see this rise to about 70%. 'This will add £3 million to 2015 forecasts and more than offsets the impact of tough market conditions in Europe,' analyst Charles Hall said.
'This deal reinforces Hilton’s position in a major market, improves long-term visibility and increases 2015E by 9%. We are increasing our target price from 400p to 475p and our recommendation from Hold to Buy.'
Shares in the group closed at 428.9p on Monday, up 3.8p or 0.9%.
Berenberg initiates Stock Spirits at 'buy'
Berenberg has initiated Stock Spirits Group (STC.L) with a 'buy' recommendation following its London listing in October.
Stock Spirits is the leading spirits maker in Central and Eastern Europe, and it's led by a UK-based management team. The strength of this team is one of the factors behind Berenberg analyst Philip Morrisey's positivity on the shares.
'The company’s highly experienced executive team is almost without exception made up of former senior management figures from global beverage companies, giving it significant competitive advantage, in our view, versus its competition, which largely consists of small local players,' he said.
Morrisey also believes Stock Spirits is an attractive potential acquisition or merger candidate.
Shares in the group closed at 257p on Monday, up 7.3p or 2.9%.
Investec lifts share price for Cranswick
Food producer Cranswick (CWK.L) has further to rally, according to Investec.
'It’s a familiar pattern now for followers of Cranswick: pig prices rise, the share price wobbles, but then recovers as the margin pressure recedes,' analyst Nicola Mallard said, reiterating her 'buy' recommendation.
'The group has confirmed margins are now improving in 2H, hence the recent small rally. However, we think the stock price has more ground to recover as it effectively missed the mid cap re-rating of recent months.'
Mallard's target price rises from £12.30 to £12.75.
Shares in the group closed at £11.55 on Monday, up 14p or 1.2%.
'Buy' Senior, Jefferies says
Aerospace engineering business Senior (SNR.L)'s acquisition of component manufacturer Thermal Engineering is a sensible move, according to Jefferies.
Senior is paying Privet Capital and a number of individual shareholders £28.3 million for Thermal Engineering, funded from the group’s existing cash and debt facilities.
'This looks a very sensible bolt-on to us, and according to management, is a ''classic Senior acquisition'',' analyst Andy Douglas said.
'Thermal bring new capabilities into the Senior group and existing margins look acceptable to us (although some very modest investment is needed in the business in the near-term, we suspect that earnings margins will be held and possibly nudge higher over time) and we like the increased exposure to the large commercial aerospace sector.'
Jefferies has a 'buy' recommendation on Senior.
Shares in the group closed at 290.5p on Monday, up 0.3p or 0.1%.
Cantor backs Clean Air Power with 'buy' stance
Cantor Fitzgerald has reiterated its 'buy' recommendation on dual-fuel specialist Clean Air Power (CAP.L) on the back of a trading update.
So far this year the company has sold about 400 units. This is a big improvement on the 300 units sold last year, but somewhat lower than the 450 units analyst Caroline de La Soujeole had predicted.
'We believe CAP is moving in the right direction. The co-operation agreement signed with Ricardo in September already seems to be bearing fruit with today’s statement noting that the partnership was delivering ''tangible progress'',' she said.
'We are BUYers of the shares as we believe CAP has an attractive technology with significant growth potential and the company is well positioned to take advantage of the growing, gas powered, vehicle markets worldwide.'
Shares in the group closed at 10.3p on Monday, down 0.6p or 5.3%.