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Broker Tips: Anglo American, EasyJet, Synthomer

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  • Berenberg cuts Anglo American target price
  • Deutsche Bank’s adds EasyJet to top sell recommendations
  • Deutsche’s also includes International Distributions Services in top sell recommendations
  • UBS upgrades Synthomer to ‘buy’
  • Jefferies upgrades Wood Group to ‘buy’

Berenberg cuts Anglo American target price

Berenberg has cut its Anglo American [LON:AAL] target price to 2,700p (3,000p) and reiterated a ‘hold’ recommendation. The broker described Anglo American’s recently revised production and cost guidance as ‘disappointing’ and suggested earnings per share need to drop by ‘at least’ 5-10%. Broker sentiment is more measured: Credit Suisse has trimmed the stock’s target price to 3,100p (3,300p) with an ‘outperform’ rating, Barclays has dropped its target price to 2,720p (3,165p), keeping its ‘equal weight’ rating and Bank of America lowered its target price to 3,300p (‘underperform’). Berenberg agreed with the company’s forecasts for a rebound in production in 2023-24 benefiting from a sustained global demand for mined metals and minerals. At close of trading yesterday, the stock was priced at 3,205p, a return of 5.2% YTD and 10.6% over 12 months.


Deutsche Bank adds EasyJet to top sell recommendations

One of Deutsche Bank’s top sell recommendations this week is EasyJet [LON:EZJ], as it is geared to the UK consumer and has a high degree of operating leverage. CMC Markets has also highlighted the company’s continuing staffing problems at Gatwick, from late flight departures to baggage handling problems, which continue to affect service and therefore revenue. On 29 November, the company posted reduced losses and a more upbeat outlook based on improved earnings and revenue. Deutsche has downgraded the stock to ‘sell’ and dropped the target price by more than 20% to 330p and Oddo BHF has cut the stock to ‘underperform’ (neutral), slashing the target price 40% to 300p. Barclays currently has an ‘overweight’ rating and a target price of 250p. At close of trading yesterday, the stock was priced at 369.8p, a return of -33.7% YTD and -26.8% over 12 months.

Deutsche Bank adds International Distributions Services to top sell recommendations

Another of Deutsche’s top sell recommendations is International Distributions Services [LON:IDS], until October this year known as Royal Mail. Berenberg last month noted the continuing problems with the workers’ unions and described the company’s current situation as ‘challenging’ and the macro outlook as ‘gloomy’, though the broker maintained its ‘buy’ rating. HSBC yesterday downgraded IDS to ‘hold’ (buy) and slashed the target price by 55% to 215p. At close of trading yesterday, the stock was priced at 210p, a return of -58.5% YTD and -56.7% over 12 months.

UBS upgrades Synthomer to ‘buy’

UBS has upgraded Synthomer [LON:SYNT] to ‘buy’ (neutral) but cut the target price by almost a third to 150p (220p). Shares in the company jumped 15% on news yesterday that the company had sold its laminates, films and coated fabrics businesses to Surteco North America for £208m. The proceeds will go to reduce debt, as part of a strategy to strengthen the balance sheet and to focus the group on higher value and higher growth markets. Berenberg had last month upgraded the stock to ‘buy’, reiterating its target price of 160p, while Barclays has an ‘equal-weight’ recommendation, with a target price of 323p. At close of trading yesterday, the stock was priced at 132.7p, a return of -66.8% YTD and -66.7% over 12 months.

Jefferies upgrades Wood Group to ‘buy’

Jefferies has upgraded the engineering business Wood Group [LON:WG.] to ‘buy’ (hold), raising its target price 26% to 190p (150p). The broker has almost doubled its DCF valuation of the stock on the company’s improved medium-term cashflow outlook, and said they “have confidence” that Wood Group’s cash exceptional outflows are finally under control, indicating the balance sheet will remain on target. As a result, the broker expects the company to be able to focus on delivering growth and returns, and urged investors to “see the positive Wood through the trees”. At close of trading yesterday, the stock was priced at 134.3p, a return of -29.4% YTD and -25.7% over 12 months.

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

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