Broker tips: Marlowe, Marshalls

Analysts at Berenberg took a fresh look at property manager Marlowe on Friday, stating that the group was worthy of attention following the completion of its recent £40m placing.

Following the placing, Berenberg pointed out that Marlowe has roughly £45m of financial firepower, which it expects to be deployed on "a strong pipeline of future acquisition opportunities", driving further upgrades over the remainder of the year.

Berenberg said: "We think Marlowe is an equity story worth bringing to the attention of a wider audience.

"It has doubled in size since the start of 2019, its shares are increasingly liquid, and it has an excellent track record of both growth (33% earnings per share compound annual growth rate since 2017) and upgrades."

With disclosure also improving, the German bank added that it was "increasingly positive" on Marlowe and reckons the stock offers a "material opportunity" for shareholders over the coming years.

Berenberg reiterated its 'buy' rating and 660.0p price target on the stock.

Analysts at Canaccord Genuity slightly raised their target price on landscaping products manufacturer Marshalls from 605.0p to 610.0p on Friday, stating a recent recovery in sales was just what the doctor ordered.

While Canaccord said it was "early days" and acknowledged that macro risks "clearly" remained, the recovery in sales since the end of May was "promising" and the group also appeared to be displaying some "decent momentum and traction".

The Canadian broker added that Marshalls should be in "a good position" with its exposure to infrastructure projects and outside domestic jobs, noting demand appeared to be strong.

"Clearly first-half profits will be severely impacted by lockdown but the second half should show a good rebound, and we expect strong profit recovery in 2021," said Canaccord.

The analysts said the key issue from here would be the sustainability of the recovery in sales with the company's balance sheet and operations looking sound.

"While valuation continues to look quite full, the group sits at a deserved (in our view) premium to the wider sector and the update was much better than feared with a good recovery and net debt reduction being seen," said Canaccord, which reiterated its 'hold' rating on the firm.