HMC Capital shares rebound as Morgans upgrades stock to 'buy'
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The news: Shares in investment manager HMC Capital were leading gains on the ASX 200 in the early afternoon, recovering from a steep plunge on Tuesday following the release of lower earnings per share guidance, as Morgans analysts upgraded their view on the stock.
The numbers: At 12:22pm AEST, HMC Capital shares had gained 16.2% to $3.80. In the previous session, shares had closed 6.6% lower.
The context: Morgans analysts upgraded their position on the stock from 'hold' to 'buy'.
The analysts said that HMC shares “screens cheap on both a multiple of earnings basis and relative to book value”, with current prices implying that HMC is “ex-growth with a questionable [net tangible assets] – a view we do not share”.
However, Morgans’ re-rating of the stock is contingent on a slew of consolidation activity coming to fruition.
What they said: “With fires on multiple fronts (Health, Digital, Energy), HMC’s outlook necessitates a period of consolidation, albeit real estate (equity / credit) can likely see FY26 FUM continue to grow,” the Morgans research note reads.
“We see a conclusion to Healthscope negotiations (c.2H26) would put a floor on HCW; a material lease could get DGT back ontrack: while a sell-down and de-gearing of the Energy Transition Fund would provide external validation of value – all critical in restoring investor faith.”
The source: Morgans research
