Broker tips: Fevertree, Paragon Banking, Persimmon
Analysts at Berenberg lowered their target price on shares of soft drinks maker Fevertree on Tuesday, noting that UK growth had been "less smooth" than it had been in the US.
Berenberg said 2019 had always been billed as "a transition year" for Fevertree, the first part of which, accelerating US growth, had gone to plan.
In contrast, the German bank said the handover of growth from the UK had been "less smooth", with the slowdown having been much sharper than anticipated.
In its November trading update, Fevertree reduced 2019 UK growth guidance to 2%.
Nonetheless, while Berenberg said that this was "disappointing", its analysts noted there were "plenty of signs" to suggest that Fevertree remained in a strong position.
Looking out to 2020, Berenberd expected revenue growth to rebound to 6% and also anticipated some internal drivers of improvement - such as a better retail promotional strategy and new product development.
Berenberg reduced its price target for the firm's shares to 2,900p from 3,250p but maintained its 'buy' recommendation.
Jefferies reiterated its 'buy' recommendation on shares of Paragon Banking Group, highlighting the "flexibility and robustness" of the lender's capital position and forecasting continued expansion in its net interest margins and loan book growth.
Nonetheless, the broker was anticipating continued political and economic uncertainty in 2020.
Paragon's common equity tier-one capital ratio declined from 13.8% to 13.7% during the past financial year, but both its CET1 and total capital ratio remained "well in excess of requirements", the broker said.
Furthermore, the non-cash nature of the items that dragged down its capital ratios and the fact that the fair value movements would be profit-neutral over time, had led management to hike the full-year dividend payout by 9.3% to 21.2p (Jefferies: 20.5p).
Over the latest 12-month stretch, Paragon had also further diversified its funding via both retail and wholesale channels while boosting its new lending via its higher-yield commercial segment and the group's impairments remained "low".
Jefferies analyst Julian Roberts had a 680.0p target price on the lender's shares.
Analysts at Canaccord Genuity have revised their target price for shares of Persimmon higher, from 2,400.0p to 2,720.0p, arguing that the stock had room to continue rising.
On the back of the homebuilder's most recent trading update, which they termed as "generally reassuring", they "tweaked" their estimates higher, adding that the group appeared to be making "good progress" with its customer care initiatives and that they anticipated further benefits in that area in 2020.
They also highlighted Persimmon's "strong" land bank and impressive attention to operational details that should support the builder's leading margins and returns over the medium-term.
"While political and macro risks remain elevated and significant, we would continue to see Persimmon as offering good relative value for investors continuing to want a position in the UK house-builders in the expectation of a broadly favourable outcome from the UK general election, despite the recent sector share price bounce," they said.
The Canadian broker also termed the firm's dividend yield of roughly 9.0% "very attractive", while praising its management team.
Furthermore, while the shares were changing hands on an estimated 2020 price-to-book multiple of 2.55, which was higher than its competitors, its return on invested capital was approximately 26.0%, against roughly 16.0% for its peers.
Canaccord kept its recommendation for the shares at 'buy'.