Compass: Berenberg raises price target
(CercleFinance.com) - Berenberg on Tuesday raised its price target on Compass to 1,425 pence from 1,350 pence, while reiterating its "buy" rating on the stock.
"The recent trading update from Compass has reinforced our view of the challenges it faces, with the recovery trajectory for revenues slower than expected, compounded by a more cautious outlook on margins due to the prolonged period of recovery," Berenberg analysts wrote in a note to investors.
With a much longer recovery in sight, allocation of new capital has become "crucial to the story," they added.
For the record, Compass raised two billion pounds of fresh equity in May to address COVID-19 and invest in the business.
Berenberg analysts said Compass has a "strong track record" of delivering solid returns on M&A, and assume 75% of the raised capital will be invested in M&A, at 17.5% returns, prompting them to lift their price target.
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