Broker tips: FD Technologies, Equals Group, Jupiter Fund Management

Analysts at Berenberg downgraded FD Technologies from 'hold' to 'sell' on Wednesday and cut its target price on the stock from 2,200.0p to 1,600.0p, citing "misplaced optimism".

Berenberg stated that in its view, FD Technologies was a classic case of valuation being unsupported by business fundamentals, noting that it believes that investors overestimate the growth opportunity of the company's Kx and MRP platforms as both have "a chequered record" of operating in difficult competitive landscapes.

The German bank said this backdrop also limits the potential growth impact of FD's recent ramp-up in investment, creating a long-term doubt about margins, while limited growth from the software-based Kx and MRP businesses also undermined the stock's valuation.

"FD trades on 65.0 times full-year 2023 price-to-earnings for what remains a 65% services-based business with sub-10% earnings before interest and tax margins and limited returns on capital," said Berenberg.

Analysts at Canaccord Genuity nudged up their target price on diversified financials firm Equals Group from 99.0p to 106.0p on Wednesday following a "positive trading update" from the company.

Canaccord stated that the early start to Equals' 2022 calendar year was said to have continued the "positive trend" that gathered pace during 2021 and appears that investments made to reposition the business towards a more business-to-business offering was "proving successful".

As a result, the Canadian bank increased 2021 revenue forecasts for Equals by 3%, in line with the guidance in the statement and, consequently, now sees earnings per share and revenue estimates upgraded by 8%.

"We note the comments regarding increased sales and marketing spend but on balance see upside risk to our new CY22E forecasts," said Canaccord, which also reiterated its 'buy' rating on the stock.

JPMorgan Cazenove downgraded its stance on Jupiter Fund Management on Wednesday to 'neutral' from 'overweight' as it took a look at European asset managers.

JPM downgraded Jupiter as a result of its channel checks indicating that net outflow continued in the fourth quarter of 2021, which it estimates to be roughly £900.0m, with limited visibility on an inflexion point.

"Jupiter's shares are not expensive and potential bid speculation could limit material absolute downside risk but conversely we believe an inflexion inflows is required for a re-rating."

JPM also cut its price target on Jupiter to 290.0p from 345.0p.