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Liberum reiterates 'hold' rating on 'fairly valued' Morgan Sindall

By Iain Gilbert

Date: Thursday 20 Feb 2020

Liberum reiterates 'hold' rating on 'fairly valued' Morgan Sindall

(Sharecast News) - Analysts at Liberum reiterated their 'hold rating on shares of British construction and regeneration group Morgan Sindall on Thursday, stating that the shares remained "fairly valued" despite a hike in their estimates for the company's earnings per share.
The broker noted that Morgan Sindall's full-year EPS of 156.3p was 3% ahead of its estimate due to good performances across most of its divisions, leading it to increase its 2020 forecast by 4%.

The broker also pointed out that average daily net cash was ?109m, versus ?99m a year earlier and its estimate of ?103m, but opted to make no changes to its full-year 2020 spot net cash estimate of ?207m. It did, however, reduce its average daily net cash estimates from ?87m to ?60m due to investment.

All in all, Liberum said Morgan Sindall trades on a 2020 price-to-earnings ratio of 12.1x, above the sector average of 9.9x, but said it was cheaper on enterprise value measures with a 2020 EV/EBIT of 7.0x, and a dividend yield of 3.1%.

Liberum added that its target price of 1850p was based on a sum of the parts methodology.


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