The FTSE 100 had another record-breaking session on Tuesday, helped in no small measure by a spike in the share price of Irish company DCC, whose core business is providing support services in the energy, healthcare and technology sectors.
Led by Donal Murphy, the Leopardstown-based but London-listed company saw its share price rise by 4.6 per cent to £57.45, helped by a “buy” recommendation from Deutsche Numis. Shares were up again yesterday by about half a per cent and have risen by almost 24 per cent over the past six months.
It has a market value of £5.7 billion and Certa, Flogas and Fannin healthcare are among the brands that will be familiar to people in Ireland.
Deutsche Numis likes the Irish company’s approach to reinvesting its strong cash flows into acquisitions to strengthen its competitive position. DCC has always had an eye for a deal and spent some £151 million on acquisitions in the six months to the end of September 2023. Given its strong cash flows, analysts’ calculations suggest it could spend up to £500 million on acquisitions each year.
“DCC’s diversity and the compounding benefit of its consistent reinvestment cash flow into acquisitions, has supported resilient trading through a period of weaker demand in healthcare and technology where there are increasing signs of improvement, and continues to underpin its long-term opportunity,” David Brockton, an analyst at Deutsche Numis, said.
While Deutsche Numis has clearly made up its mind on DCC’s future growth prospects, the company will get an opportunity to update the wider market on the progress of the business and its future outlook when it publishes its annual results on May 14th.
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