Clarksons shares were on the rise this morning after a trading update which was read positively in the City.
Stock in the world’s largest shipbroker erased most of the falls experienced in a turbulent December for global equities and was trading up by over 5% this morning.
The surge came in response to a trading update in which Clarksons said full year results for 2018 were expected to be in line with expectations.
Colin Smith, an analyst at one of Clarksons’ house brokers, Panmure Gordon, said market expectations were tightly grouped around an expectation for a full-year underlying profit of £44.2m ($56.37m).
Smith explains this would represent a healthy rebound from the second half of 2017, supported by a better balance in the freight markets and capital markets activity on track to match the past two years.
“While markets may remain jittery over the prospects for shipping, we believe Clarksons is oversold,” Smith said
Smith said Clarksons shares took a beating in late 2018 amid concerns over Donald Trump’s trade war and general fragility in the capital markets, but he expected the anticipated recovery in second half profit to settle nerves.
Clarksons shares were changing hands at £25.50 each in London in late morning, up 5.39% today.
Gerald Khoo of Liberum said: “We remain positive on Clarkson's long-term fundamentals, underpinned by its market-leading positions and investment in research and technology.”
Clarksons issued a profit warning in April given thought conditions in the capital markets restricting big ticket sale & purchase transactions but Khoo noted activity levels have since normalized.
As TradeWinds has reported, the company's half year results reflected a stronger second quarter.
“The Clarkson share price had an awful Q4 2018, falling 30%,” Khoo said. "This was a larger fall, in percentage terms, than was seen after the profit warning in April 2018.
“Sentiment towards external factors, such as trade tariffs and a potential Chinese slowdown, has made some share price weakness understandable, but this seems overdone.
“The shares have rallied strongly since the beginning of the year (+18%) but we still consider the valuation to remain reasonable.”
Panmure forecasts an underlying profit of £45.1m for Clarksons in 2018, rising to £59.9m in 2019 and £67.4m in 2020.
Liberum projects an adjusted operating profit of £42.7m for 2018, rising to £55.1m this year and £64.6m in 2020.
