Broker advises Kerry Group to split shares as price hits record high
DUBLIN stockbroker Bloxham has recommended that Kerry Group split its shares since the price of its stock has reached a level that "impairs liquidity".
The recommendation comes as Kerry's shares trade at all-time highs, with a new record of €23.66 briefly hit yesterday in the aftermath of Tuesday's expectation-beating full-year results.
"At a price of over €23 each, the shares are at a level that impairs liquidity," Bloxham analyst Joe Gill said in a note to clients. "Retail investors and sell-side traders alike are less keen to actively trade shares that cost so much, and particularly in a company where liquidity is tight due to its farmer/co-op ownership structure."
Mr Gill went on to recommend a four-to-one share split which would see Kerry's stock trading at about €4.50.
"At that level we think activity levels in the stock could significantly improve, thereby helping the group raise its liquidity and further expand its shareholder base," he added.
A spokesman for Kerry described the note as "interesting", but said Kerry was not actively considering a share split.
"While a high share price may present a psychological issue for retail investors, in reality, we believe this to be a subjective psychological position rather than a financial investment consideration," he added.
Ryanair is the most recent Iseq-quoted company to implement a share split, exchanging two €6.175 shares for every one €12.30 share held by investors in February 2007.
The shares are now trading in the €3.40 to €3.50 range.
"Academic studies indicate that while there may be a short-term bounce following a share split -- the value reverts to the pre-split valuation within a three- to six-month period," Kerry's spokesman stated yesterday.