- Jefferies upgrades AVEVA Group to Hold
- Berenberg raises Unilever to Buy
- JPMorgan cuts BP to Neutral
- Berenberg upgrades Virgin Money UK
- Deutsche Bank raises target price for Kingfisher
Jefferies has upgraded AVEVA Group (LON: AVV) to ‘hold’ (underperform), substantially raising the target price to 3,250p (1,900p). This follows Schneider Electric’s decision to make a bid for the rest of the Aveva shares it doesn’t already own, in a deal worth £9.5bn. Broker consensus on Aveva stock over the past year has moved from a ‘strong buy’ to ‘neutral’: last week Berenberg cut Aveva to ‘hold’ (buy) and raised the target price to 3,113p (2,800p), in the expectation that Schneider’s bid would be accepted. Berenberg said the offer undervalues the stock, but expects shareholders to cash in, having watched the value of their shares decline steadily over the past year. At close of trading yesterday, the stock was priced at 3,159p, a return of -7.1% YTD and -20.2% over 12 months.
Berenberg has raised Unilever (LON: ULVR) to ‘buy’ (hold), raising the target price to 4,800p (4,000p). Analysts at the bank said the group was “repositioned for faster growth”, thanks to a new business unit structure, higher category growth and better execution. The analysts also noted that Unilever’s outlook has improved, now that its long run of underperformance has started to reverse, and that the stock is currently trading at a 15% discount to key peers. Since March this year, the shares have surged more than 23% in value, closing yesterday at 4,078p, a return of 3.4% YTD and 2.9% over 12 months.
JPMorgan cut BP (LON: BP) to ‘neutral’ (overweight), trimming the target price to 520p (530p). In August, BP reported a jump in second-quarter profit to $8.45bn, up more than 200% on 2Q last year thanks to buoyant energy prices. BP profits will unlikely match that performance in future, in particular as the oil price is currently under pressure, having dropped almost 33% in the past four months. Over the past year, the broker consensus has been overwhelmingly in favour, with 22 brokers on a ‘strong buy’, nine on ‘neutral’ and one ‘strong sell’. At close of trading yesterday, the stock was priced at 431p, a return of 30.4% YTD and 30.1% over 12 months.
Berenberg upgraded Virgin Money UK (LON: VMUK) to ‘hold’ with a target price of 170p, saying that the bank will experience falling revenues and struggle to grow the low-cost deposits needed for SME and mortgage lending growth. JP Morgan Cazenove last week reiterated its ‘neutral’ rating, nudging up the target price to 200p (190p), while Deutsche and Shore Capital have this year consistently rated the stock as a ‘buy’. At close of trading yesterday, the stock was priced at 132.6p, a return of -23.6% YTD and -36.9% over 12 months.
Deutsche Bank has raised the target price for Kingfisher (LON: KGF) to 280p (270p) and reiterated its ‘buy’ rating. Kingfisher reported a robust 1H performance in a difficult market and confirmed their FY23 guidance of £770m, backed by better-than-expected current trading. Additional support from the UK government should limit some of the earnings risk for FY24 and there is a potential FX tailwind from weaker Sterling. Despite significant uncertainty on consumer demand, the broker believes that a number of structural factors will support home improvement spend. At close of trading yesterday, the stock was priced at 218.6p, a return of -32.8% YTD and -34.8% over 12 months.
