Broker tips: DCC, Assura
By Iain Gilbert
Date: Wednesday 11 Jun 2025
(Sharecast News) - Analysts at Berenberg cut their target price on sales, marketing and support services group DCC from 7,020.0p to 6,700.0p on Wednesday to reflect the sale of its healthcare unit.
Berenberg said DCC's FY25 results on 13 May delivered "credible" adjusted underlying earnings growth of 4.8% year-on-year, while a 5% increase in its dividend marked the 31st consecutive year of growth since its IPO in 1994.
The German bank noted that investor attention remains on DCC's strategic action plan to simplify operations and focus solely on its energy business, with the disposal of its healthcare arm set to be completed by Q325.
However, despite "solid progress" towards simplification, Berenberg said the market was yet to ascribe "meaningful value" to DCC's share price, with a valuation of just 10.7x FY26 price-to-earnings for a business that has "an attractive" short-term returns profile and long-term energy story.
"We reduce our price target to 6,700.0p on a SOTP basis [...] and think there is a significant opportunity for investors willing to do the work," said Berenberg, which has a 'buy' rating on the stock.
"We model the healthcare sale consideration (£945.0m, of which £130.0m is deferred by two years) and the return of £800.0m of proceeds to shareholders. We model a £100.0m share buyback due to complete by September 2025, assume a £600.0m tender offer upon completion of the disposal, and model a final £100.0m share buyback in FY28. Our FY26 forecast of 440.0p EPS assumes circa 10% of growth yoy; circa 3% organic and circa 7% from the impact of share count reduction."
Shore Capital has retained a 'hold' rating for Assura following the news that the company has accepted an increased cash offer from KKR, saying that alternative suitor Primary Health Properties still represents the "best option" for shareholders.
The healthcare property investment and management firm said on Wednesday that it has agreed to an increased and final 52.1p-a-share offer from from KKR and Stonepeak valuing the company at around £1.7bn.
The announcement comes days after Assura said due diligence in relation to a rival 51.7p takeover proposal from Primary Health Properties was still ongoing, with both parties "working closely" together.
According to Shore Capital analyst Andrew Saunders, the best option for Assura's shareholders would be to reject the KKR/Stonepeak big and accept the PHP offer and remain invested in a listed company, with the merger of the two complimentary businesses creating "a new powerhouse in a sector with attractive long-term growth prospects".
"While the new offer marginally exceeds that of PHP for the here and now, as we have consistently sad, the real value of PHP's offer stems from remaining listed. We continue to believe that PHP provides the best option for Assura shareholders with the recent trading update presenting a picture of Assura as a business performing well, with rents accelerating, development picking up, EPRA NTA growing and prospects looking brighter," Saunders said.
"Shareholders must surely now ask themselves why now would be the best time to leave the Assura journey?... accepting that the [KKR/Stonepeak] cash offer materially undervalues the business (placing no value on the operating platform or debt book) and hands the business at the bottom of the cycle to private equity, leaving them to benefit from the future double-digit returns."
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN