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Broker Tips: Shell, IWG and Trainline

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  • UBS and Goldman Sachs up Shell target price
  • Berenberg upgrades IWG
  • JP Morgan raises Trainline target price
  • Jefferies cuts forecast for Glenveagh Properties
  • Morgan Stanley starts coverage of Genuit Group with ‘equal-weight’ rating

Shell (LON: SHEL) has been in the news, after its record profits triggered calls for a windfall tax to help ease the cost of living crisis. The profits have been driven in part by a strengthening oil price: Brent is currently at $103/bbl, a 49.95% increase year-on-year, which is reflected in the steady gains made by the stock since September 2020. The shares closed yesterday at 2,233.5p, a return of 37.72% YTD and 57.02% over 12 months. UBS raised the price target to 2,550p (2,450p), reiterating its ‘buy’ rating, while Goldman Sachs edged the Shell price target up 2% to 2,900p, also with a ‘buy’ rating.

Berenberg yesterday upgraded IWG (LON: IWG), the serviced office provider, to ‘buy’ from ‘hold’, having spotted a ‘clear value opportunity’. Berenberg analysts noted that its shares had fallen 37% when downgraded to ’hold’ in March last year. The bank suggests that its complicated disclosure and accounting systems may cause the market to overreact to bad news from IWG, creating upside potential in the right conditions. The bank notes that IWG has launched a number of strategic initiatives that “could create meaningful upside over the long term [which is] difficult to value today”. Berenberg kept its price target on the stock at 310p. At close of trading yesterday, the stock was worth 230.40p, a return of -20.82% YTD and -38.94% over 12 months.

Trainline (LON:TRN) last week posted strong results for the year to end of February, as the use of trains by the public returns to pre-pandemic levels. Group net ticket sales were £2.5bn, up 222%, and revenue 181%, while the company’s debt was reduced by -£151m. The outlook, assuming no more lockdowns, is for continued strong growth, with forecast ticket sales of between £3.8-£4.2bn, above the pre-pandemic FY2020. However, the share price has some way to go to reach pre-pandemic heights of 547p (Feb ‘20), closing yesterday at 284.3p, a return of 1.90% YTD and -33.98% over 12 months. JPMorgan raised the Trainline price target from 235p to 307p last week (5 May), followed by Liberum (435p), Morgan Stanley (310p) and Barclays (280p).

Jefferies yesterday cut Irish housebuilder Glenveagh Properties (LON: GLV) to ‘hold’ (from ‘buy’), with a price target €1.24 (€1.44), as the share price slumped some 15% in value. However, according to Barclays, the broker consensus is that it is a ‘strong buy’. Last month, Glenveagh posted strong interim results for 2021, with a positive outlook, indicating a company that had weathered the Covid lockdown thanks to a resilient business model, though investors are clearly spooked by global economic and political uncertainties facing the housebuilding sector. Shares are currently at 0.97p on the London Stock Exchange, just off its 52-week low of 0.86, giving a return of -20.7% YTD and 5.87% over 12 months.

Morgan Stanley started coverage of Genuit Group (LON: GEN), with an ‘equal-weight’ rating, and a price target of 550p. The broker consensus is a ‘strong buy’, with two other brokers on ‘neutral’. The company (formerly Polypipe), which manufactures water, climate and ventilation systems, last month posted strong growth in profit and revenue for 2021, due to growing demand and price increases to offset input cost inflation, and was able to raise its shareholder payout. Shares in the company nevertheless have declined steadily from a 52-week high of 801p in September 2021, closing yesterday at 401p, just off its 52-week low.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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