Broker tips: Morgan Sindall, Serica Energy

(Sharecast News) - Analysts at Berenberg raised their target price on construction outfit Morgan Sindall from 5,000p to 5,250p on Friday, following the group's revelation that its full-year results would be significantly ahead of previous expectations.

Morgan Sindall announced on Thursday that its FY25 earnings were expected to come in well ahead of guidance on the back of a continued performance improvement in its key Fit Out division.

"This is yet another strong update from Morgan Sindall - again reflecting the strength of the Fit Out performance, which continues to reach new highs," said Berenberg, which also noted that Morgan Sindall's order-book visibility and improvement in average net cash guidance had caught its eye.

The German bank, which reiterated its 'buy' rating on the stock, said it was cognisant of the strength of the shares over the last two years and also the dynamics regarding the future evolution of profitability in the Fit Out division, but stated it continues to support Morgan Sindall's strategy.

Berenberg also added that the stock trades at a 13.8x FY25 price-to-earnings ratio, 8.0x EBITDA and 9.4x EBIT.

Canaccord Genuity raised its target price on Serica Energy from 215p to 240p on Friday following the group's acquisition of upstream assets from Prax E&P, which recently entered administration.

The $25.6m deal secures current production of around 13,800 barrels of oil equivalent per day and will be completed in stages, with Serica set to acquire Prax Upstream on 1 January 2026. Two additional sales and purchase agreements initiated by Prax were expected to close by the end of Q126.

While Canaccord Genuity noted that the assets provided Serica with immediate output, it also noted that they were largely late-life, with decommissioning on the horizon. The Lancaster field, producing 5,900 boepd, was scheduled for shutdown in Q326 as the Aoka Mizu FPSO will be repurposed, potentially for the Sea Lion project in the Falklands.

Canaccord Genuity highlighted two strategic upsides - a 40% working interest and operatorship in the Shetland Gas Plant, positioning Serica as a hub operator alongside its Greater Laggan Area assets; and approximately $1.3bn in tax losses carried by Prax Upstream, offering near-term shielding and longer-term portfolio optionality.

The Canadian bank, which reiterated its 'buy' rating on the stock, described the acquisition as being both accretive and well-timed, enhancing Serica's production base, asset diversity, and tax efficiency at a "compelling entry cost".

Reporting by Iain Gilbert at Sharecast.com