Broker tips: Plus500, Mitchells & Butlers, AstraZeneca
Analysts at Berenberg upped their target price on online trading business Plus500 from 1,033.0p to 1,120.0p on Thursday, stating the group had continued to recent tumultuous conditions across financial markets.
Berenberg said Plus500 was once again trading "substantially ahead" of prior consensus estimates and was "undoubtedly" doing "fantastically well" in the current market environment, acting as a hedge against a volatile market.
However, the German bank thought it was prudent not to extrapolate from this performance, not least of all because it had seen this exact scenario before.
"During the crypto-asset boom and bust in 2017-18, Plus500 upgraded multiple times and had a record-breaking year, but ultimately this trend proved unsustainable," said Berenberg.
"Therefore, despite making large upgrades to our FY 2020 estimates, we continue to value Plus500 as the sum of the expected capital return for FY 2020 and normalised FY 2021 performance."
Berenberg also said it was assuming a continuation of the positive trends seen in new customers, and high levels of both customer income and customer trading performance, even while anticipating a return to normalised operating metrics from the third quarter onwards.
Berenberg reiterated its 'hold' rating on Plus500's shares.
JP Morgan raised its rating on Mitchells & Butlers to 'overweight' as it cut 2020 earnings estimates for UK pub companies by an average of two-thirds to reflect the Covid-19 shutdown.
Analysts at the investment bank upgraded M&B from 'neutral' because of its liquidity, sustainable debt and deeply discounted valuation. Those factors leave the shares with about 100% of potential upside, JP Morgan said, raising its price target to 340p from 490p.
In "precarious times" for the sector JP Morgan analysts, led by Ted Nyhan, said pub groups had not given much guidance and that estimates could change frequently with news flow. UK pubs can survive a mid-length shutdown, probably till July, but trading will be weak after restrictions are lifted, Nyhan said.
Credit Suisse raised its target price for AstraZeneca to reflect the potential of the FTSE 100 company's Tagrisso lung cancer treatment.
On 10 April a phase 3 trial of Tagrisso was stopped two years early because of overwhelming efficacy. Credit Suisse said it assumed $3.2bn of peak sales for Tagrisso and rapid commercial development when data is published.
2020 is an execution year for AstraZeneca after its pipeline success in 2019 with treatments for breast cancer, ovarian and prostate cancer due to be approved, Credit Suisse's analysts said. The bank increased its price target on AstraZeneca shares to £90 from £85 and kept its 'outperform' rating.
"We continue to believe that the longer-term profit leverage at AZN from industry-leading sales growth is underestimated," the analysts wrote in a note to clients.
AstraZeneca's first-quarter sales were 7% better than consensus and core earnings were 12% ahead with about half the sales beat due to Covid-19 stocking, Credit Suisse said.
Credit Suisse noted that emerging markets sales rose 16% and contributed 36% of group revenue despite the Covid-19 induced slowdown in China.