Broker tips: Superdry, Electrocomponents, British Land
Analysts at Berenberg raised their target price on clothing retailer Superdry from 235.0p to 280.0p on Tuesday but stated a "leap of faith" was required as the group's risk/reward balance was weighted very evenly.
Berenberg said the 2021 trading year was "a heavily disrupted year" for Superdry and noted that while top-line development remained "very subdued" in the first half of 2022, it did come alongside a shift towards a full-price stance, particularly in the company's e-commerce channel.
While the German bank highlighted that ultimately, should Superdry management deliver on its medium-term targets, there will be "significant upside" to the firm's current share price, it also said it remains "cautious" about the achievability of the company's "ambitious" targets.
Looking forward, Berenberg said it was "more cautious" than internal expectations and forecast that full-year 2024 revenues will be roughly 14% down from 2018 levels at a 6.5% adjusted EBIT margin.
Analysts at RBC Capital Markets upgraded their stance on Electrocomponents shares from 'sector perform' to 'outperform' on Tuesday, citing the potential for further market share gains.
RBC Capital Markets said it has been a fan of Electrocomponents for a while and now believes the pandemic has further strengthened its "competitive advantage" given its digital and web capability, stock availability and omnichannel superior service proposition.
The Canadian bank highlighted that it sees "strong potential" for further market share gains, believes mid-teen margins were achievable from a number of levers, and now factor this in by 2026, and also anticipates that further mergers and acquisitions will operate as an incremental value driver.
In addition to the rating change, RBC also hiked its target price for the stock from 1,070.0p to 1,350.0p, stating it was confident that Electrocomponents will be "a long-term winner".
Citi upgraded British Land to 'neutral' from 'sell' on Tuesday but said the path to structural growth remains uncertain.
The bank said that while it continues to believe that over time, work from home could significantly reduce office space requirements, it now estimates this will occur over a longer period and removes near-term downside for offices reflecting a flatter office market.
"We continue to estimate a trough in retail property but now a small recovery in values as reduced bad and doubtful debts could provide a floor at relatively high asset yields while also providing an earnings per share bounce to Mar-22 of circa +15%.
"While these changes in our view remove some downside risk for now, risks could quickly return, and even if they don't, we do not estimate significant structural office or retail property growth meaning the stock could lack upside catalysts."