- Deutsche raises Shell and BP target price
- RBC start coverage of Hikma Pharmaceuticals with ‘outperform’
- Berenberg upgrades 4imprint to ‘buy’
- Deutsche raises Future target price
- Jefferies downgrades Persimmon to ‘hold’ (buy)
Deutsche Bank has upped its Shell LON:SHEL target price 8.2% to 2,987p (2,761p), with a ‘buy’ recommendation, and its BP LON:BP. target price up 4.2% to 549p (527p), also with a ‘buy’. The broker noted that the EU large-cap oil sector shares have performed strongly over the past 12 months, up 17% in absolute terms and outperforming MSCI World by 40% in US$ terms. “After years of underperformance, this is indeed welcome but in our opinion it’s far from done yet.” Other brokers are also positive: Berenberg (2,900p, ‘buy’), Barclays (3,300p, ‘overweight’), JP Morgan Cazenove (2,900p, ‘overweight’) and RBC Capital (3,200p, ‘overweight’). At close of trading, the Shell share price was 2,358.5p, a return of 45.4% YTD and 40.0% over 12 months.
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RBC Capital started coverage of Hikma Pharmaceuticals LON:HIK yesterday with a target price of 1,750p and an ‘outperform’ recommendation. Shares in the company have lost almost a third of their value so far this year but, the analysts said, this was mostly due to the generics unit underperforming due to unfavourable trading conditions. However, the broker is expecting the generics division to return to growth in 2023, and the larger branded and injectables divisions to deliver high single-digit growth over the medium term, while the appointment of a new CEO may also reassure investors. At close of trading, the Hikma share price was 1,518p, a return of -31.5% YTD and -33.3% over 12 months.
Berenberg has upgraded 4imprint Group LON:FOUR to ‘buy’, raising its target price 63% to 4,215p (2,700p). The broker had kept FOUR on ‘hold’ all year, fearing that supply chain difficulties would prevent a recovery in gross margin expansion. Although margin is still “significantly lower” than in 2019, stronger sales growth, better cost control and better returns in marketing spend had more than compensated, and provided the stock short-term scope for outperformance. At close of trading, the 4imprint share price was 4,170p, a return of 47.9% YTD and 48.1% over 12 months.
Deutsche has raised its Future LON:FUTR target price to 2,852p to (2,621.00p), with a ‘buy’ recommendation. The broker’s analysts were impressed with Future’s strong set of FY22 results, which comfortably achieved the 36% revenue growth target they set a year ago, despite the very difficult market conditions that Future has had to cope with all this year, from tough Covid-fuelled comparatives through to declines in digital audiences and digital advertising yields. Berenberg analysts were not so impressed, dropping their target price 20% to 2,600p because of a higher weighted average cost of capital and lower peer multiples. At close of trading, the Future share price was 1,397p, a return of -63.4% YTD and -57.9% over 12 months.
Jefferies has downgraded housebuilder Persimmon LON:PSN to ‘hold’ (buy), lowering its target price to 1,436p (1,485p). However, this is the exception, as the broker has upgraded Bellway LON:BWY to ‘buy’ (2,458p) and raised the target prices of the other housebuilders in its coverage, including Barratt Developments LON:BDEV (452p, ‘hold’), Taylor Wimpey LON:TW. (124p, ‘buy’), Redrow LON:RDW (592p, ‘buy’) and Berkeley Group LON:BKG (4,554p, ‘buy’). Deutsche analysts commented that lenders continue to respond to lower swap rates by lowering lending rates to encourage buyers: Lloyds Bank, the UK’s biggest mortgage lender, has cut rates by 50bps across a number of products, and Coventry Building Society has cut rates by 20-45bps. At close of trading, the Persimmon share price was 1,270p, a return of -55.7% YTD and -54.3% over 12 months.
