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Broker snap: Margins mediocre at Morgan Crucible
29 Jul, 2010 10:34
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Top line growth is finally arriving at engineer Morgan Crucible but unfortunately, notes Panmure Gordon, it coincides with below par margin performance.
Nevertheless, the broker has raised its price target from 220p to 240p to reflect the pick-up in revenue, but at the same time it is cutting its recommendation from "buy" to "hold" in the belief that, "with its stretched balance sheet, we believe that we can re-visit this stock at lower price levels later in the year."
"Finally Morgan Crucible's top line has sprung into life. The accompanying margin performance, however, is less endearing and does not match the demanding standards set by other management teams in this sector," claims Panmure analyst Oliver Wynne-James.
"The 8% increase in the dividend is welcome but, in cash terms, it is a slight illusion and is paid for by the scrip alternative," he added.
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