Analysts at Peel Hunt have reiterated a 'Buy' rating on Tharisa PLC (LSE:THS, JSE:THA, OTC:TIHRF) with a 245p price target after a trading update which envisages headline EPS well ahead of their estimates.
The analysts noted that ahead of its results' release, scheduled for next month, Tharisa said it sees its headline EPS of 41-42 US cents (USc) and reported EPS of 53-54 USc.
They said: "The headline EPS (a proxy of the underlying repeatable earnings of the group) range is well ahead of our USc38 estimate and slightly ahead of consensus at USc40.8. The reported EPS range at USc53-54 is slightly behind our reported USc55 EPS. The bulk of the gap between the headline and reported EPS is the US$42mln financial gain on the Karo acquisition in 1H."
The Peel Hunt analysts added: "We believe the headline EPS coming in well ahead of our estimates shows the underlying strength of the Tharisa business. With healthy earnings, we expect strong cash generation, which should permit both ongoing dividends and the ability to reinvest into the Karo project."
They concluded: "The shares presently trade at less than 2x EV/EBITDA, highlighting the value gap we see."
In afternoon trading, Tharisa shares were changing hands at 105p, up nearly 3% on Monday's close.