Broker tips: Just Eat, Aveva, Cobham

Analysts at Canaccord Genuity upgraded Just Eat to 'buy' on Monday following an announcement that the group and Takeaway.com had reached an agreement in principle for an all-share merger.

Canaccord said the geographic profile of the new company was "complementary" and noted that the issue of a lack of a chief executive at Just Eat had been solved with the addition of Jitse Groen, the founder and CEO of Takeaway.com, who was now set to head up the combined group.

"As Just Eat is trading at a 15% discount to our target price of 750p, we upgrade our recommendation to 'buy' from 'hold'," said the analysts.

Analysts at Morgan Stanley hiked their target for shares of Aveva on Monday, from 3,150.0p tp 3,925.0p, highlighting the software maker's "very strong" operational execution in 2019 and the shift in investor perception since the start of 2018 following the acquisition of SES.

The latter, they said, had transformed the narrative around the company from one of a firm heavily exposed to capital expenditures in the Oil&Gas sector which while highly cash generative was cyclical to one of an outfit that was "far more" diversified and "driving process industry digitalisation".

Despite the tough comparatives after growth of 124% in 2018 and as tailwinds ease, the investment bank bumped up its forecast for growth in 2020 from 6.3% to 7.0%.

A shift from licenses to rentals/subscriptions would be a hurdle, but they also expected Aveva to benefit from "strong underlying momentum" and, perhaps, IFRS 15 revenue recognition on multiyear contracts.

Analysts at Berenberg lowered aerospace and defence manufacturer Cobham to 'hold' on Monday after its shares began trading 1.7% above a cash offer made by Advent.

Buoyed by reports that Cobham's largest shareholder believes Advent's 165p per share, £4bn cash offer undervalued the business, shares headed north of the initial offer.

Berenberg felt that particular view had perhaps been bolstered by Cobham's strong first-half performance, reported alongside the offer announcement, which indicated that its turnaround strategy was ahead of plan.

"We certainly see longer-term value potential for Cobham and while we do not rule out that a higher bid may emerge, the buyer is not obvious given the diverse nature of the group," said Berenberg.