On Wednesday, RBC Capital Markets analyst Andrew Brooke upgraded DCC Plc. (DCC:LN) (OTC: DCCPF) stock rating from Sector Perform to Outperform and raised the price target to £60.00 from £58.00. Brooke cited the recent performance dip as an opportunity, indicating that the company is well-positioned for the current market uncertainties.
He pointed out that DCC's short-term trading is expected to be robust, with the potential sale of its Healthcare division within the next six months and continued execution of its Energy strategy, including mergers and acquisitions (M&A).
Brooke highlighted the Energy division's improved valuation prospects due to its cleaner operations, positive mix drivers, higher returns, and more favorable working capital dynamics. According to Brooke, these factors contribute to a Sum of Parts (SOP) target price increase to 6,000p. Additionally, he suggested that the value of the Energy business alone could be over 8,000p when using industry comparators.
The analyst's positive outlook on DCC is rooted in the company's ability to meet challenges in an uncertain global landscape. Brooke's assessment indicates that DCC's strategic moves, particularly in its Energy division, are expected to yield positive results. He also noted the possibility of further upside from M&A activities, which could contribute to the company's growth and enhance shareholder value.
DCC's planned divestiture of its Healthcare unit is part of a broader strategy to streamline its operations and focus on more profitable sectors. This move is anticipated to improve the company's financials and allow for a sharper focus on its core businesses.
The upgrade by RBC Capital Markets reflects a confidence in DCC's strategic direction and its capacity to navigate through market volatility.
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