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Broker Tips: ITM Power, Balfour Beatty, Centrica

  • RBC Capital upgrades to Outperform
  • Jefferies reinitiates ITM Power with Buy recommendation
  • Jefferies reinitiates Balfour Beatty with Buy recommendation
  • Citigroup upgrades Centrica to ‘Buy’
  • Numis has downgraded Kingfisher to Sell

RBC Capital has upgraded [LON: MONY] to ‘outperform’ (sector perform) and raised the price target to 250p (230p), suggesting that the 20% de-rating since the summer now offers a buying opportunity. The broker said that MONY is well placed to benefit from consumers wanting to save money over the coming months, describing the stock as a “resilient play during the economic downturn” able to deliver 7% year-on-year growth next year. Barclays trimmed the MONY target price to 220p (230p), reiterating its ‘equal weight’ rating. At close of trading yesterday, the stock was priced at 183.7p, a return of -14.9% YTD and -10.1% over 12 months.

Jefferies has reinitiated ITM Power [LON: ITM] with a ‘buy’ recommendation and a price target 185p, despite the stock’s poor performance so far this year. The theory is that green hydrogen is the energy of the future playing its part in the transition to renewable energy, but it seems that over the past year investors have lost patience with the stock, though the brokers remain positive. Barclays (600p) and JP Morgan Cazenove both have ‘overweight’; RBC Capital has ‘outperform’ (500p); but Berenberg last month reiterated a long-standing ‘sell’ recommendation (100p). At close of trading yesterday, the stock was priced at 97.6p, a return of -74.9% YTD and -74.5% over 12 months.

Jefferies also reinitiated Balfour Beatty [LON: BBY], with a ‘buy’ recommendation and a target price of 375p. The brokers noted that the housebuilder is set to deliver a sixth year of earnings growth out of seven, since the new management took over. The broker is expecting 5% earnings growth to 2025, putting it 8-10% ahead of consensus. The broker also said the market is underappreciating the housebuilder’s improved security of earnings and its transition to a lower risk business model. At close of trading yesterday, the stock was priced at 310.6p, a return of 18.0% YTD and 16.6% over 12 months.

Citigroup upgraded Centrica [LON: CNA] to ‘buy’ (neutral) yesterday, trimming the target price down to 81p (97p). Shares in Centrica have performed well so far this year but fell on news on Monday that the government was pressing ahead with plans for a windfall tax on renewable electricity generators. It is feared that the measure, due to be announced this week, would discourage investment in the sector. Broker consensus has been wholly positive all year, with not one sell recommendation among the 15 brokers covering the stock. At close of trading yesterday, the stock was priced at 69p, a return of -2.9% YTD and 14.3% over 12 months.

Numis has downgraded Kingfisher [LON: KGF] to ‘sell’ (reduce) and slashed the target price by almost a third to 150p (215p). Last month, Kingfisher reported that pre-tax profits for the six months to July 31 had slumped by 30% to £474m, as customers rein in their discretionary spending in the face of surging energy costs. The DIY group also faced increased costs of raw materials, which they would struggle to pass on to their customers, and continuing logistics problems. Broker consensus has deteriorated over the year, now with four on ‘buy’, eight on ‘neutral’ and six on ‘sell’. At close of trading yesterday, the stock was priced at 212.2p, a return of -38.5% YTD and -36% 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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