Matas A/S, the Danish drugstore chain that held an initial public offering in June, rose the most since its first day of trading in Copenhagen, as three banks recommended buying the stock due to its dividend yield.
Matas rose as much as 3.5 percent, the most since June 28, which was the first day of trading in the IPO. The shares advanced 2.7 percent to 131.50 kroner at 10:16 a.m. in the Danish capital with trading volume at 35 percent of the one-month daily average.
Danske Bank A/S, Nordea Bank AB and Morgan Stanley, which all helped arrange Matas’s IPO, today started coverage of the stock with buy recommendations at their brokerage units. Morgan Stanley and Nordea both set a price estimate of 145 kroner a share. Danske Markets set a price target of 150 kroner.
“Although not a ‘growth’ story, Matas is defensive, low-risk and very cash generative,” Anisha Singhal, a London-based analyst with Morgan Stanley, said in a note today. “We see the potential for significant, on-going cash returns to shareholders.”
Matas, bought by CVC Capital Partners Ltd. in 2007, is Copenhagen’s first private-equity IPO since Axcel A/S sold jewelry maker Pandora A/S on the stock market in October 2010. The shares were priced at 115 kroner in the sale and had gained 7.6 percent since the IPO before today.
“We continue to see Matas as a strong yield case offering potential for attractive cash returns to shareholders in the years to come,” Danske Markets in Copenhagen said in a note. “Based on a strong foothold in the Danish retail market for beauty and health products we see only limited risks to the business model.”
Matas, which sells drugs and beauty products at 293 Danish outlets, will on Aug. 28 report earnings for the three months through June. The Alleroed, Denmark-based company will also publish historical quarterly earnings reports going two years back.
“Matas is a story of stable growth and future payments of very high dividends in coming years,” Nordea Private Banking in Copenhagen said in a note. “As much as 25 percent of the current market value is set to be paid back to shareholders in the next three years.”