Brokers' Views: Brewin Dolphin

Brewin Dolphin’s industrials and support services analysts Jon Lienard and James Tetley have upgraded a few of the stocks under their coverage empire in recent weeks. The target price of industrial materials group Cookson, for instance, was lifted from 490p to 560p – against the present 450p – after a recovery in the FTSE 250 constituent’s end market was confirmed via third quarter sales growth in both core divisions. A premium rating on forecast earning for the full year of 17.9p reflects its ‘recovery potential’.

FTSE SmallCap player Fenner is another where recovery is mooted. In fact, the conveyor belts specialist has ‘above average’ potential for revival as the impact of its ‘huge’ capital improvement programme of recent years ‘is starting to come through as some of the early cycle businesses see the benefit of an end to destocking’. Hoisting its target price from 202p to 235p and acknowledging very real prospects for further uplifts, the stock is a buy.

A less sturdy recommendation, yet still upgraded from reduce to hold, is aerospace and engineering group Hampson Industries, whose shares have been on the wane under forecast concerns and, Tetley and Lienard suggest, ‘the threat that debt covenants could be breached if trading fails to recover in H2’. However, with the price all the way down to their target of 63p (now 71p) and the pipeline at record levels, the main issue is the extreme difficulty in predicting the timing of order conversion. ‘We still believe that further forecast downgrades are likely this year in part due to lingering scepticism over the [Boeing] 787 schedule, but if meaningful downgrades can be avoided, Hampson’s share price will start to look attractive against most valuation metrics.’

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