Canaccord Genuity downgrades NCC Group to 'hold'

Canaccord, which did move its target price on the stock from 318.0p to 340.0p, upgraded its 2021-23 adjusted underlying earnings estimates for NCC by 8% and 2%, and pointed out that it expects to see a post-Covid-19 recovery in trading.

The Canadian bank also moved 4% and 0% ahead of the current consensus at the adjusted EBIT level for 2022-23, and in line for 2021.

Canaccord's analysts also highlighted that they were awaiting "more information" on NCC's first quarter and the integration of the IPM business in the firm's full-year results in September.

"At our target price, the price-to-earnings multiple is around 27x which is a circa 13% discount to the sector average (sector average around 31x December 22) and which, given the slightly lower revenue growth versus the sector, seems appropriate to us," said Canaccord.

"The upside risk might be that the IPM acquisition yields more synergies than we expect, but conversely, the risk to the downside could be that the integration proves more cumbersome than initially envisaged."