In a note to clients, the US bank’s analysts said its positive stance on the Shell brand licensee reflects the London main market-listed firm’s strong track record of driving growth in 15 African countries with access to a further nine countries from the pending acquisition of Engen International Holdings.
The analysts pointed out that their price target represents a valuation of 8.8x 2019 EV/EBITDA estimates and a 16.5x P/E applied to its pro-forma forecasts for Vivo including EVO.
They added that the target is based on “the comparable valuations of the Global Fuel Retailers, with the higher growth of Vivo tempered by the equity risk premium of operating in Africa in our view.”
Vivo Energy shares floated on both the London and Johannesburg stock exchanges on 10 May this year following an initial public offering, with the shares priced at 165p each, giving the firm an initial market capitalisation of £1.98bn.
The stock scored a good premium on first day dealings, reaching a closing peak of 186.5p but has drifted back since to a current level of 138p, down 2.8% on Wednesday’s closing price.