Companies roundup: Rolls-Royce & Canal+

Rolls-Royce (RR) shares were knocked by 3 per cent in early trading after Citi downgraded its recommendation on the engine maker from “buy” to “neutral” because of its view that the shares are nearing fair value. 

While the investment bank’s analysts raised their price target to 641p, which compares to a current price of just under 570p, they argued that “the strong growth outlook is now reflected in the share price”. Rolls-Royce trades on 27 times forward consensus earnings. 

The shares have risen by more than 85 per cent over the last 12 months as the market has responded positively to chief executive Tufan Erginbilgic’s transformation plan, which kicked off in 2023. The company expects to release full-year results on 27 February, with guidance for an underlying operating profit of £2.1bn-£2.3bn and free cash flow of £2.1bn-£2.2bn. CA

Read more: What to make of Rolls-Royce's controversial CEO

Canal+ deal revives London listings market

The £2.6bn listing of Canal+ (CAN) shares in December helped to make an otherwise moribund year for IPOs in London look more respectable.

The spin-out by French media giant Vivendi (FR:VIV) took the total amount of funds raised by companies through London listings to £3.4bn last year – a 256 per cent uplift on the £954mn generated in 2023, according to EY.

The volume of listings fell, though, to just 18 over the course of a year that saw 88 companies either delist or transfer their primary listing to another market (mainly the US).

“It’s been a quiet year for the London Stock Exchange, and while Q4 activity picked up significantly, headwinds facing the UK’s listing market remain,” said Scott McCubbin, UK & Ireland IPO leader for EY.

However, he added there were “reasons for cautious optimism” heading into 2025, citing a more stable post-election policy environment, listing reforms and a strong pipeline of companies preparing to float. MF

DEC digs out deal for methane sites

Diversified Energy Company (DEC) has bought some gas-producing sites in the US for $45mn (£36mn).

The purchase from Summit Natural Resources is of a group of sites in the Appalachian Mountains that produce methane from coal mines. The sites, in Alabama, Virginia and West Virginia, generate 12 million metric cubic feet of gas per day and contain total reserves with a present value estimated at $55mn. DEC also said there was also the potential to generate additional revenue by selling credits received for producing an alternative energy source.

House broker Peel Hunt said the price paid equated to a multiple of 3.75-times cash profit, demonstrating DEC’s ability to “add accretive assets to its Appalachian portfolio at attractive valuations”. The company’s shares fell by 2 per cent in early trading, though. MF