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Advice to brokers: B&M, Impax Asset Management

The analysts of Berenberg lowered their price target on the asset manager Impax from 1,350.0p to 1,250.0p on Wednesday as continued market volatility somewhat offset the company’s “strong first half results”.

Berenberg, who reiterated his “buy” rating on the stock, said Impax’s first half was characterized by “a resilient level of organic growth.” However, the German bank also noted that this was offset by falling markets.

“The company reported strong first half results with earnings per share of 21.5 pence (+82% year-on-year), around 5% better than Berenberg’s expectations. Impax posted decent organic growth of its assets under management of £468.0 million in the second quarter (through March 31), representing an annualized organic growth rate of approximately 5%, Berenberg said.

“Total assets under management fell 8% to £38.0 billion due to negative market movements driven by the conflict in Ukraine. Organic growth has slowed since the first quarter; this is understandable in light of higher levels of uncertainty in the first part of the year. . In April and May, the markets continued to decline and are down about 5%.”

Taking this into account, Berenberg has cut its estimates for the full year 2022-24 by around 5-9% to reflect the intermediate pace of earnings per share, but also current market levels.

The analysts of German Bank improved their rating on the retailer B&M from “sell” to “hold” on Wednesday, indicating that earnings risks were increasing, but rising valuations were also present.

Deutsche Bank said B&M had joined a growing list of retailers and issued guidance for the current business year that did not appear to match the facts or investors’ general world view.

The German bank said the problem now was that it was waiting for B&M to cut its adjusted underlying profit forecast by £550.0-600.0 million on weaker comparable sales from its current assumption of stability or on the deleveraging of the costs of its holding hypothesis. stable cost/sales – or more likely both.

“The decline in B&M’s core customer buying power remains a concern and we are seeing an overhang of further consensus downgrades (DB FY23e Adjusted EBITDA around £500.0m), but the decline in the valuation no longer looks compelling, and we are raising our recommendation to ‘hold,’ said DB, who also lowered his price target on the stock from 560.0p to 480.0p.

“There will likely be some near-term volatility, but over 12 months we believe the absolute decline appears limited to around 11x Cal 22e’s price-earnings ratio.”

Reporting by Iain Gilbert on Sharecast.com