Canaccord Genuity raises target price on Clarkson

(Sharecast News) - Analysts at Canaccord Genuity hiked their target price on shipping firm Clarkson from 4,300.0p to 4,500.0p on Tuesday, stating the firm was "well-positioned" to ride out volatility.

Canaccord Genuity said trading has been supportive, with Clarkson's weighted forward order book delivering H2 weighted profits. As FY24 draws to a close, the analysts reckon Clarkson will have tripled pre-tax profits since FY19.

The Canadian bank also noted that unless Clarkson looks to move on any M&A activity or make larger internal investments, it sees higher than consensus dividend per share payouts. It also sees further scope for upside to its target price should Clarkson reinvest surplus cash into the careful expansion of its roughly 19% RoE business.

"Beyond FY24E, we think broker FOBs signal better ahead and evidence of a long-term potential super cycle as we see limited yard capacity (barely sufficient to replace ~2-3% of the global fleet p.a.) and the need for accelerated new build requirements to meet increasingly stringent environmental regulations," said Canaccord, which reiterated its 'buy' rating on the stock.

"We think share price upside factors include: 1) 'Show me' of DPS payout uplift, as we believe that DPS is a key share price driver (Fig. 6) but payout is low (FY23 at 37% vs. 2013-2021's 59%); and, 2) increasing proportion of ARR (and duration), which potentially exerts upward PER pressure."

Reporting by Iain Gilbert at Sharecast.com