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Broker tips: Chemring, Standard Chartered
(Sharecast News) - Analysts at Berenberg raised their target price on technology products and services group Chemring from 360.0p to 420.0p on Wednesday, stating the firm's "strong" first-half performance had highlighted underlying momentum. Berenberg said Chemring's interim 2022 results demonstrated "continued strong operating momentum", with all key metrics meaningfully ahead of consensus.
The German bank stated Chemring's Roke unit continued to perform "very well", and said the planned investment into the business provided "a strong platform" for the momentum to be sustained in the coming years.
"While this higher investment, combined with inflationary pressure and US order delays, is expected to temper profitability in H2, we think the longer-term outlook remains bright," said the analysts.
Berenberg also noted that Chemring's higher-margin Sensors & Information division was also "well positioned" to win order opportunities linked to rising defence budgets, and thinks this will be "a source of upside" to outer-year estimates.
"Against this supportive backdrop, we reiterate our 'buy' rating and increase our price target to 420.0p, reflecting our raised outer-year estimates and higher peer multiples," concluded Berenberg.
Analysts at Jefferies reiterated their 'buy' recommendation for shares of Standard Chartered on Wednesday, highlighting the potential now for the lender to re-load its buy-back programme for the second quarter.
Jefferies pointed out that StanChart had finished the first quarter with a Common Equity Tier 1 capital cushion of 13.9% after removing $6.5bn of risk-weighted assets linked to corporate business with lower returns.
Although the analysts noted they were looking for further confirmation on those RWA savings at the lender's webinar, they said the savings confirmed expectations for a further $500.0m of buybacks to be announced alongside StanChart's second-quarter results. Through 2024, Jefferies now anticipates a cumulative capital return of $5.4bn.
The analysts also bumped up their revenue estimates for 2022-24 by 3.0% on average after embedding a cumulative 150 basis points of Fed interest rate hikes for the period, on top of the prior 75bp foreseen.
Jefferies, which has a 991.0p target price on the stock, also raised estimates for StanChart's net interest income over 2022-24 by 11%, leaving them 2.0% ahead of the analyst consensus.
Reporting by Iain Gilbert and Alexander Bueso at Sharecast.com
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