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RBC Capital lifts price target on DCC
(Sharecast News) - RBC Capital Markets lifted its price target on DCC on Wednesday to 5,800p from 5,700p after full-year results a day earlier. The bank said the results were in line, with EBITA of £683m versus its forecast of £687m, and trends largely as expected.
"We have tweaked numbers due to the incremental M&A and lower tax rate guidance partly offset by higher interest and forex," it said. "2025E EPS moves up circa 1% as a result."
RBC said it has reworked its sum of the parts, hence the price target increase.
The bank kept the shares at 'sector perform', saying it believes that DCC needs to stabilise its return on capital employed if a valid argument for multiple expansion is to be made.
"Whilst headline multiples remain undemanding, we think overall valuation will be somewhat limited by the conglomerate nature of the group, along with the fact that, despite the well-communicated Energy strategy, there remains some uncertainty on the pace of the transition and whether DCC can maintain the pace of M&A to get to its 2030 target," RBC said.
"In addition, the fact that ROCE has continued to fall (from 17.1% in 2021 to 14.3% today) hasn't helped the argument for multiple expansion."
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