Broker tips: Boku, Rolls-Royce, Begbies Traynor
Berenberg has upped its price target for tech firm Boku after the group's first-half trading performance beat expectations.
The mobile payments and ID specialist said on Tuesday that interim revenues would be "at least” $34.0m, up 37% on the previous year, while adjusted earnings before interest, tax, deductibles and amortisation had jumped 50% to $9.6m.
The firm also expects its full-year performance to be ahead of expectations as a result of the strong first half.
Berenberg, which has a 'buy' rating on the Aim-listed stock, upped its target price to 260.0p from 190.0p following the update, and increased its revenue estimates.
"Ahead of expectations, with so much more to come. Boku delivered a very strong first-half update, with payments revenue and EBITDA well ahead of expectations, and its Identity segment returned very strong growth also. This leads us to upgrade our full-year 2021-2023 revenue estimates by 5%," said the German bank.
Analysts at Citi said on Tuesday that shares of engine maker Rolls-Royce offered "significant long-term value".
Citi, which rates the stock at 'buy', stated it did not know when the wide body market would recover, but it does believe it will.
"When it does, we expect Rolls-Royce to recover faster (as it has more new deliveries adding to the fleet and fewer old aircraft being retired)," said Citi.
"In our view, the often-cited £750m free cash flow (10% yield) as ‘early as 2022’ is not a sufficient reason to buy the stock, but the £1.5bn+ FCF in the longer term (20%+ FCF yield) is."
The bank added that cash flow could be stronger than expected in the medium term as working capital is driven out, but it regards this as "a very nice one-off benefit" which should be valued accordingly.
Analysts at Canaccord Genuity slightly lowered their target price on corporate restructuring specialist Begbies Traynor from 170.0p to 163.0p on Tuesday despite the firm beating expectations in both of its divisions.
Canaccord noted that group revenue was 7% ahead of its forecasts and 19% stronger year-on-year, comprising 13% acquired and 6% organic growth, while adjusted pre-tax profits were 10% ahead of expectations, leaving the group with a net cash position of £3.0m at year-end.
The analysts also highlighted that dividends were in line with its forecast of 3.0p and Begbies' outlook indicated that positive momentum from year-end had continued into the current financial year.
"This gives us confidence in our adjusted profit-before tax forecasts, which are unchanged, being at least achieved," said Canaccord.
The Canadian bank, which reiterated its 'buy' rating on the stock, stated that it now expects "further clarity" on market conditions and activity levels "as the year unfolds", particularly in regards to insolvency appointments as government support measures for business are projected to be withdrawn towards the end of 2021.
"For this reason, the company expects FY22 results to be H2 weighted. However, given that we forecast just 5% organic revenue growth for both divisions in FY22, we believe the risk remains to the upside," said Canaccord.