Broker tips: Polymetal, BAE Systems, Flutter
Analysts at RBC Capital Markets hiked their target price in shares of gold miner Polymetal in the wake of the Analysts Day held the day before.
They called attention to various positives for the stock to back up their decision, saying that growth remained on track and that its approach to Environmental, Social, and Governance remained "ahead of peers" while the Covid-19 pandemic was only having "a limited impact".
On the other side of the equation, the only negative was the likelihood of changes in the tax regime in the Russian Federation, although they also cited "risks" in Kazhakstan.
The analysts also cited positives as regards the outfit's production, profile and project updates.
RBC raised its target price for the firm's shares from 1,650.0p to 1,850.0p and reiterated its 'outperform' recommendation.
BAE Systems offers potential upside of 50% that the market is undervaluing, JP Morgan analysts said as they reiterated their 'overweight' rating on the aerospace company.
JP Morgan trimmed earnings estimates for BAE by 10% for 2020, 6% in 2021 and 4% in 2022 to reflect Covid-19's impact on its civilian aerospace division and some disruption to the defence business. The bank also reduced its price target for BAE shares to 765p from 775p.
Organic revenue will contract by 2% in 2020 but then resume growth at 8% in 2021 and 5% the year after, JP Morgan said, adding that BAE was its "top idea" in European aerospace and defence stocks.
"Crucially, we expect no demand destruction for BAE's defence products in the next few years," David Perry and fellow JP Morgan analysts wrote in a note to clients.
BAE is likely to keep its pledge to pay its deferred final dividend of 13.8p a share in the second half of 2020, the analysts said. That puts the shares on a dividend yield of about 5% for 2020.
"BAE offers growth, visibility and much lower risk than most stocks," Perry and colleagues wrote. "We believe the market is undervaluing these attractions."
Analysts at Berenberg hiked tier target price on bookmaker Flutter from 6,500p to 7,00p on Wednesday, stating the group was "finely balanced" to withstand the current coronavirus-fuelled period of disruption.
Berenberg said prior to retail closures and disruptions to sporting events due to the Covid-19 outbreak, Flutter had been performing well across all its divisions.
While a favourable win margin contributed to this performance, the analysts stated that underlying active customer trends for Flutter remained "strong".
At the same time, prospective mergee The Stars Group's international business had also performed "exceptionally well", especially during the period of disruption.
However, the German bank noted that while Flutter's operational performance is encouraging, the group would trade at a premium to the sector when the TSG deal completes - with high leverage (+3.5x on deal completion) and potential integration risk.
But the analysts said it continued to believe that the risks and opportunities were finely balanced and reiterated its 'hold' rating on Flutter.