Peel Hunt raises target price on John Menzies

Peel Hunt said John Menzies continued to trade "slightly ahead" of current market expectations in the first half despite ground services in Europe being particularly weak.

Peel Hunt stated the European underperformance had been offset by "encouraging trading elsewhere", which it added was driven by new business gains, a generally strong performance within its cargo unit, extremely tight cost management and additional support from government schemes.

"We increase 2021E PBT 9% to £33.4m (26.1p) and 2022E PBT 14% to £57.6m (41.0p). Following our forecast changes the shares trade on 12.2x 2021E EPS, 7.8x 2022E EPS and 7.3x PHe Recovered EPS (adjusted 2019) of 43.9p," said Peel Hunt, which also reiterated its 'buy' rating on the stock.

The analysts also noted that Menzies' restructured cost base and reshaped business portfolio should enable it to generate "structurally improved margins" as volumes recover.