BCP Stockbrokers, one of the bigger of the second tier of Irish brokers, is beefing up its research operations and has now extended its coverage to Ryanair and Telecom Eireann.
Both are given "buy" tags and in the case of Telecom, BCP is looking at a float price of €3.75 (£2.95) compared to BCP's fair value estimate for Telecom of €4.15 (£3.27) a share, very much at the upper end of price/earnings multiples for European telco shares.
BCP's valuation of Telecom does not include any bid premium, and if bid potential is factored in then the broker believes that €4.50 (£3.54) reflects both Telecom's underlying valuation and some bid potential. BCP believes however that any bid for Telecom would have to be pitched "considerably higher than our current valuation of €4.50".
As well as tipping Ryanair, BCP is also giving "buy" recommendations to both Kerry and Kingspan. In Kerry's case, the broker expects that a significant acquisition in the second half of the year will drive the share ahead from its current €11.80. For Kingspan, BCP believes that at current levels, the group is a likely target or could be taken private by its own management. "Either scenario could drive the share price above our €3.50 price target," BCP states.
