Broker tips: Totally, Empiric Student Property, Bunzl

(Sharecast News) - Analysts at Canaccord Genuity slightly raised their target price on healthcare services provider Totally from 60.0p to 70.0p on Monday after the group's "immediately earnings enhancing" acquisition of Pioneer Health Care for up to £13.0m. Canaccord Genuity stated its 2022-24 earnings per share estimates had increased by 3.0%, 34.6%, and 37.5%, respectively, to reflect the deal, leading it to also reiterate its 'buy' rating on the stock.

The Canadian bank said that Pioneer, a leading provider of NHS secondary care, added to the group new outsourcing capabilities and complementary insourcing services across a wide range of treatments including orthopedics, pain management, and spinal surgery. It is listed on key national frameworks and holds contracts with NHS Foundation Trusts and CCGs primarily across the North of England that will enhance the group's footprint.

"Strategically, Pioneer and Totally Healthcare will be combined to create a stronger offering under the Pioneer brand, providing a significant opportunity to leverage AQP status across an enhanced range of services throughout the UK and Ireland," said Canaccord.

"We believe Totally is well placed to secure future growth as a result of this strengthened proposition, focussing on areas where demand for services is outstripping supply with NHS waiting lists at record highs."

Analysts at Berenberg upgraded real estate investment trust Empiric Student Property from 'hold' to 'buy' on Monday, stating the stock was "geared to the re-opening".

Berenberg said although Empiric's full-year 2021 results were "heavily affected| by the Covid-19 pandemic, with strong application data and continued demand for higher education, it now expects to see a return to normal operations in autumn 2022.

Ahead of this normalisation, Berenberg noted that Empiric management had continued to lay the groundwork for success, with portfolio optimisation continuing as the firm's refurbishment, recycling activity and small-scale development continued, while all of its operations were internalised - mitigating cost and increasing agility.

"We continue to think that the wholesale return of international students, which are Empiric's primary pre-pandemic occupier, this autumn is likely to result in an uptick in both occupancy and organic growth rates, resulting in a forecast EPS CAGR of 36.6% to FY 2024E," said the German bank.

"With a step-change in performance forecast and the shares trading at a 15% discount to our unchanged 100.0p price target, we upgrade our rating to a 'buy' from 'hold'."

Credit Suisse upgraded distribution and outsourcing group Bunzl to 'neutral' from 'underperform' on Monday and hiked the price target to 2,900.0p from 2,450.0p.

It said that while the run-off of Covid-related work will remain a headwind in 2022, this should be more than offset by tailwinds from product inflation.

"In the mid to longer-term we think that Bunzl's scale and agnostic approach to product type means it can play an active role in supporting companies meet their sustainability targets," the bank said.

"Product inflation, corporate sustainability agenda, ongoing value-added M&A and relatively stable end markets should support mid-single-digit total profit growth for the core business in the coming years."

CS said historical weakness in underlying margin has not been apparent since 2018 and it thinks that both Bunzl's ability to support companies adapt to a more sustainable product mix and rising demand for higher-margin own-brand products in an inflationary environment should provide greater support going forward.

"This is, we think, offset by limited organic growth (we estimate 2%), full valuation and near-term risks around renewal of its contract with its largest client."