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Home » Regular Columns » Broker Tips » Broker Tips: CRH Group, ITV, ASOS and SSP Group
  • Brokers cut price target for CRH Group
  • Berenberg downgrades ITV to “Sell”
  • Canaccord Genuity lowers Kainos target price
  • ASOS target price cut
  • Deutsche Bank cuts SSP Group rating

CRH Group (LSE: CRH, ISE: CRG, NYSE: CRH), the largest building materials business in Europe and North America, has had a good start to the year, according to CEO Albert Manifold. Despite market uncertainties, the latest trading update highlights good underlying demand, with Q1 group sales, earnings and margin all ahead of last year. Deutsche Bank analysts cut the CRH price target to €50 (from €56), reiterating a ‘buy’ rating. Barclays raised CRH to ‘overweight’ (from equal weight), with a price target of €44, and Credit Suisse trimmed the price target to €51 (€52), with an ‘outperform’ rating. At close of trading yesterday, the stock was worth 3,215p, a return of -17.55% YTD and -9.49% over 12 months.

Berenberg has downgraded the broadcaster ITV (LSE: ITV) from ‘hold’ to ‘sell’, despite consensus expectations of “modest growth” in advertising revenue in 2023. The German bank believes consensus estimates are too high, given the absence of any major football tournament next year, some new advertising restrictions to come and ITV’s shift out of linear TV, which provides the bulk of its revenues. According to the analysts, ITV’s expectation that its online strategy would not affect linear consumption is “unrealistic”. Berenberg has halved its target price on the stock from 128.0p to 64.0p. The stock closed yesterday at 72.56p, a return of -33.41% YTD and -37.69% over 12 months.

Kainos (LSE: KNOS), the digital transformation and IT specialist, issued a strong trading update and outlook, supported by significant contracted backlog, high customer satisfaction and robust pipeline, according to Shore Capital. The broker reaffirmed its rating for the stock as a ‘buy’ at 1,260p, which is c.45% below the recent peak and about 30% below the 3-year mean, and said that “continued momentum, resilience and growth should logically give the stock impetus for the upside”. However, analysts at Canaccord Genuity lowered their target price for Kainos from 1,880p to 1,400p, on fears that high IT salary inflation will reduce margins and earnings per share growth over the next 12-18 months. The stock closed for trading yesterday at 1,305p, a return of -31.87% YTD and -15.81% over 12 months.

Online fashion retailer ASOS (LSE: ASC) is expected to report mild revenue growth of 3.2% year-on-year, according to analysts’ forecasts. Sales growth accelerated slightly in the first quarter of this year but retail demand remains a concern, as inflation will force consumers to cut back on spending, while escalating shipping costs and supply chain pressures will eat into margins. ASOS shares have lost some 73% in value since July last year, and are currently approaching two-year lows. Jefferies cuts Asos price target by some 40% to 2,440p, though it retains a ‘buy’ rating. Credit Suisse also cuts Asos price target by 23% to 2,850p, with an ‘outperform’ rating. The stock closed yesterday at 1,417p, a return of -41.28% and -72.47% over 12 months.

SSP Group (LON: SSPG) closed down after Deutsche Bank analysts cut the stock to ‘hold’ (from ‘buy’), with a price target 265p (333p). The analysts said that the catering sector is still in recovery from the Covid-19 crisis at a time of growing macroeconomic risks due to the war in Ukraine, strong inflation and rising interest rates. Morgan Stanley and JP Morgan have an ‘overweight’ rating on the stock, while Shore Capital has a ‘buy’. The closed at 228.6p, a return of -4.79% YTD and -26.47% over 12 months. The stock closed yesterday at 234.5p, a return of -2.37% and -24.67% over 12 months.

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This article is not investment advice. Investors should do their own research or consult a professional advisor.

James Norris

James Norris

James is a highly experienced writer and editor, gained from more than 20 years in the financial services industry, in particular wealth management and asset management.

He initially worked as a financial journalist for a number of leading media brands, including the FT Group, Financial News, Euromoney and Incisive Media, covering most aspects of the asset management industry. More recently, James switched to work as an in-house content specialist for fund management and wealth management groups, including JP Morgan Asset Management, Quilter Cheviot Investment Management, AXA Investment Managers and Invesco Perpetual.

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