- UBS upgrades SSE to ‘Buy’ and cuts National Grid to ‘Neutral’
- UBS raises Segro to ‘Buy’
- Numis upgrades Pearson to ‘Hold’
- Berenberg downgrades Hummingbird Resources to ‘Sell’
- Berenberg upgrades Synthomer to ‘Buy’
In the electricity sector, UBS has upgraded SSE LON:SSE to ‘buy’ (neutral), with a target price of 1,650p (1,570p), but cut National Grid [LON: NG] to ‘neutral’ (buy), lowering the target price to 960p (1,080p), after the share price lost more than a quarter of its value since August. RBC analysts said SSE was well placed to benefit from rising power prices, though these have recently moderated due to the UK government’s price cap. Six brokers have a ‘buy’ recommendation and two are ‘neutral’. At close of trading yesterday, the stock was priced at 1,523p, a return of -8.3% YTD and -7.4% over 12 months.
UBS has raised industrial property developer Segro LON:SGRO to ‘buy’ (neutral), with a target price of 950p (1,000p), after Segro said that long-term structural trends meant that demand for space was outpacing supply, and supporting higher levels of rental growth. Segro reported a 33% growth in the near-term pipeline of potential rent. Bank of America also raised Segro to ‘buy’ (neutral) but dropped the target price to 850p (1,200p). Berenberg cuts its Segro price target to 1,040p (1,260p), retaining a ‘buy’ rating. At close of trading yesterday, the stock was priced at 798p, a return of -47.1% YTD and -40.9% over 12 months.
Numis has upgraded Pearson LON:PSON to ‘hold’ (reduce), almost doubling the target price to 960p (520p), after Pearson in its 3Q trading update announced 7% growth in group underlying sales, continued operational and strategic momentum and full-year operating profit expectations that are on track. CEO Andy Bird said their plan for accelerated margin improvement is proceeding as planned, leaving Pearson “well positioned to navigate the challenging macroeconomic environment”. This week, Deutsche Bank and Shore Capital have both reiterated their ‘buy’ recommendations, and JP Morgan Cazenove its ‘overweight’ rating. Kepler Cheuvreux raised its Pearson target price to 925p (850p), rating the stock a ‘hold’. At close of trading yesterday, the stock was priced at 957.4p, a return of 56.1% YTD and 52.1% over 12 months.
Berenberg has downgraded gold miner Hummingbird Resources LON:HUM to ‘sell’, more than halving the target price to 4.0p (9.0p). This is not surprising, as the miner’s losses have surged this year to $24m, from just $3.2m last year. The company is struggling to realise the production potential at its Yanfolila mine in Mali, while its second gold mine, Kouroussa, in Guinea, is still only 50% built. As a result, 1H production levels this year are still below those of 2021. At close of trading yesterday, the stock was priced at 5.1p, a return of -64.5% YTD and -70.7% over 12 months.
Berenberg has upgraded chemicals company Synthomer LON:SYNT to ‘buy’, keeping the price target at 160p. Analysts at the bank changed their rating of the stock when the company announced it had agreed a relaxation of covenants with its banking syndicate, a key development as its leverage is expected to reach 3.6x this year’s Ebitda after acquiring Eastman’s resins business earlier this year. The analysts estimated that Synthomer shares were trading on a 2023 p/e multiple of 6.4, well below the long-term average of 10.5. At close of trading yesterday, the stock was priced at 105.3p, a return of -73.6% YTD and -77.8% over 12 months.
