On Monday, Jefferies updated its stance on DCC Plc (LSE:LON:DCC) (OTC:DCCPF), a leading international sales, marketing, and support services group, by increasing the price target to GBP76.00 from GBP74.00. The firm has reaffirmed its Buy rating on the company's shares.
The revision in the price target is attributed to a new analysis by Jefferies, which suggests that the consensus may not fully account for the potential growth in DCC's business segments. Specifically, the firm indicates that there could be an underestimation of the combined effect of margin expansion in DCC's Volume-based Energy business, which includes Oil, LPG, and Biofuels, and high single-digit growth in the Non-Volume Energy sector, particularly in Solar PV installations.
Jefferies' earnings per share (EPS) forecast for DCC stands 2% above the consensus for the financial year 2025, and this gap is expected to widen to 5% by the financial year 2027. The investment firm's valuation of DCC employs a sum-of-the-parts (SOTP) approach, where divisions are benchmarked against their key peers. The new price target of 7600p represents a projected 15 times the earnings for the financial year 2025 estimated price-to-earnings (PE) ratio.
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