Berenberg slightly raises target price on Inchcape
Inchcape
782.00p
12:40 24/12/24
Analysts at Berenberg slightly raised their target price on automotive distribution, retail, and services company Inchcape from 1,035.0p to 1,085.0p on Friday following the group's acquisition of Derco.
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Berenberg stated that Inchcape's now completed acquisition of Derco marked "a strategic leap forward for the group" as it "significantly" increased its exposure to the fast-growing Latin American market and favourably continues its shift towards distribution, which now makes up 93% of adjusted operating profits.
The German bank upgraded its forecasts for the deal, with 15.2% and 20.5% accretion to full-year 2024 and 2025 adjusted earnings per share estimates, respectively.
"Despite a circa £1.0bn price tag, pro forma leverage at the end of FY22 will be just 0.6x net debt/EBITDA, and we expect cash generation to drive deleverage to just 0.1x net debt/EBITDA by FY24 end," said Berenberg, which reiterated its 'buy' rating on the stock.
"On our new forecasts, the shares trade on just 10.3x FY23 P/E (5.9x EV/EBITDA), which we think is an attractive entry point to the story."
Reporting by Iain Gilbert at Sharecast.com