- Deutsche Bank reiterates ‘hold’ rating for GlaxoSmithKline
- Redburn reinitiates coverage of Rolls-Royce with cautious ‘neutral’ rating
- Barclays cuts its Metro Bank target price
- Redburn reinitiates BAE Systems with ‘buy’ recommendation
- Credit Suisse downgrades Kingfisher to ‘neutral’
Deutsche Bank has reiterated its ‘hold’ rating for GlaxoSmithKline LON:GSK and the target price of 1,500p. The bank’s analysts yesterday said GSK has “continued its spate of mixed recent pipeline newsflow”, including a negative update on Blenrep, the BCMA myeloma asset, which will raise serious questions over the asset’s outlook. Last week, GSK also announced its gepotidacin antibiotic trials had been halted early over a question of efficacy. Barclays on Monday reiterated its ‘equal-weight’ rating and the target price of 1,450p, while JPMorgan yesterday cut its GSK price target to 1,600p (1,900p), with a ‘neutral’ rating. Shore Capital, however, reiterated its ‘buy’ rating, saying the stock was undervalued. At close of trading yesterday, the stock was priced at 1,387p, a return of -14.1% YTD and -12.5% over 12 months.
Redburn has reinitiated coverage of Rolls-Royce LON:RR. with a cautious ‘neutral’ rating, after Rolls-Royce published a positive 3Q trading update last week. Deutsche currently gives the stock a ‘buy’ rating, which it upgraded in August while trimming the target price to 90p (95p). In a note this week, Deutsche Bank said Rolls-Royce’s Q3 trading update confirmed 2022 guidance, for a number of reasons: contract price rises and energy hedging helped to preserve margin; reduced net debt; record order intake for Power Systems, providing revenue cover for 2023 and beyond; and on Defence, RR continues to see robust customer demand. Deutsche analysts also noted Rolls-Royce’s comment on the upcoming decision on the USFLRAA programme (the US army’s BlackHawk replacement), describing the decision as a “near-term catalyst”. At close of trading yesterday, the stock was priced at 88.4p, a return of -29.3% YTD and -39.2% over 12 months.
Barclays almost halved its Metro Bank LON:MTRO target price to 70p (130p), and downgraded the stock to an ‘underweight’ rating, despite Metro last week posting results indicating the bank was back in the black in September, on both an underlying and statutory basis, thanks to a “supportive” interest rate environment, and a tight control on costs and risks. Liberum Capital has a ‘sell’ rating, with a target price of 77p. As Russ Mould of AJ Bell said: “(MTRO) still needs to convince the market it is now on a sustainable path.” At close of trading yesterday, the stock was priced at 87.1p, a return of -9.4% YTD and -33.7% over 12 months.
Redburn reinitiates BAE Systems LON:BA. with a ‘buy’ recommendation, on the basis that growth prospects from export markets may not be fully priced in, given its exposure to the US defence market. The analyst also described BAE Systems as the best income stock in its peer group. Last week BAE announced it had been awarded an £80m contract to service Typhoon jets belonging to the air forces of Germany, Spain, Italy and the UK. Redburn joins an entirely positive broker consensus. JPMorgan raised the BAE Systems target price to 1,100p (1,000p), with an ‘overweight’ rating, while Barclays has an ‘overweight’ rating (1,020p) and Deutsche a ‘buy’ rating (970p). At close of trading yesterday, the stock was priced at 786p, a return of 42.6% YTD and 37.2% over 12 months.
Credit Suisse has cut Kingfisher LON:KGF to ‘neutral’ (outperform), dropping the target price to 247p (305p), implying a 20% fall in the value of the shares in difficult trading conditions. Already in September, Kingfisher had posted a fall in pre-tax profits of a third, with like-for-like sales down 4%, describing its sales across outdoor and big-ticket items as ‘resilient’. The overall consensus among brokers is neutral, with JP Morgan Cazenove on ‘underweight’ (220p) and Jefferies with a ‘hold’ (240p), and only Deutsche recommending a ‘buy’ (270p). At close of trading yesterday, the stock was priced at 225.2p, a return of -34.1% YTD and -32.0% over 12 months.