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Broker Tips: Berkeley Group, BT Group, Greatland Gold

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  • Berenberg upgrades Berkeley Group to Buy
  • HSBC upgrades Entain to Buy
  • Deutsche Bank upgrades BT Group to Hold
  • Whitbread on JP Morgan ‘positive catalyst watch’
  • Berenberg reduces target price for Greatland Gold

Berenberg has upgraded Berkeley Group (LON: BKG) to ‘buy’ (hold), and raised the target price to 4,500p (4,120p), on the strength of a “good level of demand [that] continues to support pricing above business plan levels”, despite soaring cost inflation. Berkeley Group is the only housing stock that escapes a comprehensive sector downgrade for Berenberg’s housebuilders, all from ‘buy’ to ‘hold’: from the FTSE 100, the analysts have downgraded Taylor Wimpey, Persimmon and Barratt Developments; and from the FTSE 250, Vistry, Redrow, Crest Nicholson and Bellway, again all from ‘buy’ to ‘hold’. At close of trading yesterday, the stock was priced at 3,638p, a return of -22.6% YTD and -20.5% over 12 months.

HSBC has upgraded Entain (LON: ENT) to ‘buy’ (hold), but dropped the target price to 1,490p (1,760p). HSBC’s upgrade reflects a strongly positive broker consensus, consistent over the year, with 14 brokers on a ‘strong buy’ and only one ‘neutral’. Entain, the London-listed sports betting giant that owns Ladbrokes, Coral, bwin, PartyPoker and Sportingbet among other brands, has grown fast over the past two years – so far this year, it it has acquired five brands in Europe and Canada. In its 1H 2022 results, the company posted an 18% increase in group net gaming revenue, though online revenue was down 7%, as punters return to the high street shops. At close of trading yesterday, the stock was priced at 1,225p, a return of -25.4% YTD and -34.1% over 12 months.

Deutsche Bank has upgraded BT Group (LON: BT.A) to ‘hold’ (sell), maintaining its target price of 140p. The analysts said that BT shares were down more than 20% on June last year, when they downgraded the stock to ‘sell’. Deutsche was one of the two brokers to have a ‘sell’ on the stock last week, in contrast to nine others with a ‘strong buy’. Though the share price has declined steadily over the past five years, the group has increased its earnings per share each year by an average 1.3%. However, its dividends and revenue have also declined, which won’t encourage shareholders. At close of trading yesterday, the stock was priced at 142.7p, a return of -14.4% YTD and -9.0% over 12 months.

JPMorgan has placed Whitbread (LON: WTB), owner of Premier Inn, on ‘positive catalyst watch’ ahead of the group’s 1H results due on 25 October. The broker keeps its ‘overweight’ rating and edges the target price down to 4,100p (4,150p), taking a cautious view on the European hotel sector, in light of uncertainty over consumer sentiment and the direction of revenue per available room going into the winter. At close of trading yesterday, the stock was priced at 2,663p, a return of -9.0% YTD and -17.2% over 12 months.

Berenberg reiterated its ‘buy’ rating for Greatland Gold (LON: GGP) yesterday, which it has maintained since April 2021, but reduced the target price to 18p (22p), reflecting doubts about the company’s growth prospects and the likelihood of the company reaching breakeven any time soon. Nevertheless, the three brokers that cover the stock all have a ‘strong buy’ on the stock. Greatland has secured £200m in new funding, which will fully finance the development of its 30% share of the world class Havieron gold-copper deposit in Western Australia. GGP also announced it has strengthened its Board with three of Australia’s most experienced mining industry executives to guide the company’s development. At close of trading yesterday, the stock was priced at 8.9p, a return of -43.5% YTD and -48.9% over 12 months.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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