Broker tips: Bytes Technology, Tharisa

Barclays initiated coverage of value-added IT products reseller and services firm Bytes Technology at 'overweight' on Thursday with a 640.0p price target.

"We think Bytes ticks all the boxes for quality-focused investors but recognise that alone may not be enough with a 27x FY23E price-to-earnings against the current backdrop," it said.

"We note, however, that it is also defensive in two relevant ways: 1) against wage inflation/talent wars; and 2) against economic uncertainty."

Barclays said high employee retention, a strategy of developing junior talent, and compensation linked to profit support the former, while a track record of M&A in times of uncertainty and resilient organic growth support the latter.

"We expect continued momentum at the FY trading update in mid-March and are 3% ahead of FY23E Bloomberg consensus."

Analysts at Berenberg raised their target price on mining outfit Tharisa from 200.0p to 220.0p on Thursday, stating the group's recent acquisition of its Black Economic Empowerment partners' 26% stake in Tharisa Minerals would be accretive to its net asset value.

Berenberg, which stood by its 'buy' rating on the stock, noted that Tharisa currently owns 74% of Tharisa Minerals, which in turn owns the Tharisa platinum group metals and chrome mine in South Africa. BEE partner Thari Resources currently owns 20% of Tharisa Minerals and the Tharisa Community Trust owns 6%.

However, Tharisa has agreed to acquire the combined 26% interest in exchange for 13.9m new ordinary shares in the firm, for a total consideration of ZAR 390.0m (£19.11m).

The transaction for the 20% holding from Thari Resources was unconditional and effective from 16 February, while the transaction for the 6% from the Tharisa Community Trust was subject to obtaining certain statutory approvals specific to the trust but the German bank expects the transaction to close on 31 March.

"The company says that the transaction is consistent with the Minerals and Petroleum Resources Development Act of 2002 as well as the recent court ruling in South Africa which clarified the 'once empowered always empowered' position for mining companies, meaning that Tharisa will not be required to re-empower its holding," added Berenberg.