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Broker snap: Forecasts upped at Dignity

Tue, 15th Mar 2011 13:02

While UBS keeps its 'neutral' rating on funeral home operator Dignity, it upgrades its forecasts as pre-arranged funerals should lead growth in the near future.The full year 2010 results were slightly better than expected, with a 2% beat in operating profit as a result of better-than-expected profits from the pre-arranged funeral plan division, according to analyst Isabel Green.The broker ups its earnings estimates for 2011 and 2012 by 3% and 4%, respectively, to reflect the higher base for funeral plans and a slightly lower tax rate than previously assumed."We see Dignity's pre-arranged funerals as an important driver of the future growth of its funeral service business, pulling in an additional 84 more funerals per 100 than would naturally fall to Dignity's branch network," says Green.The target price is increased by 4% to 735p, from 700p, in line with the upgrades.