RBC Capital lifts price target on JTC after Citi Trust deal
RBC Capital Markets lifted its price target on on Thursday as it updated its forecasts for the first-half results, forex and the Citi Trust acquisition, assuming it completes at the end of H125.
The bank said its 2024 earnings per share estimate has come down 3% for forex, a slight H1 miss and marginally higher interest.
RBC's 2025 EPS estimate is broadly unchanged and the forecast for 2026 EPS moves up 8% as a result of the Citi Trust deal, driving an increase in the target price to 1,100p from 980p.
Professional services provider JTC announced on Monday that it had bought Citi Trust - the global fiduciary and trust administration services business - from Citigroup for $80m.
"We remain positive on the structural growth potential, the longevity of clients, as well as the high margins and strong cash generation," RBC said.
"In our view, JTC is well positioned given its unique ownership model and jurisdictional reach. We continue to believe consolidation will be a major theme and expect JTC to continue to play its part.
"That said, the stock has performed well, the pace of M&A is likely to slow down with gearing at circa 2x post Citi Trust and recent M&A needs to be bedded in."
RBC said it sees limited valuation upside at present and sees better options elsewhere in the sector at this point for new money, although it continues to be "happy holders".
It rates the shares at 'sector perform'.
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