Broker tips: Frontier Developments, Anglo American, Antofagasta
Analysts at Berenberg hiked their target price on video games developer Frontier Developments from 2,500.0p to 3,500.0p on Thursday after the group delivered another strong trading update a day earlier.
Berenberg highlighted that Frontier Developments' update showed trading across all four of its franchises was ahead of expectations and noted that with Elite Dangerous player numbers at their highest level in history, the release of its Odyssey title later in the year could be a step change for the franchise.
"While Frontier's shares are expensive, its growing portfolio of high-quality, long-lifecycle franchises is worth the premium," said the analysts, who also reiterated their 'buy' rating on the stock.
The German bank also acknowledged that Frontier has tightened full-year 2021 sales guidance to £90.0m-95.0m but added that with the Odyssey console and Lemnis Gate releases added to the 2022 trading year, it saw fit to increase its sales estimates by 4% to £150.0m, ahead of company compiled consensus of £133.0m-153.0m.
JP Morgan cut its rating on Anglo American to 'neutral' and upgraded Antofagasta to the same status as the bank started moderating its highly bullish view of mining and steel companies.
Euphoria surrounds mining and steel at the start of 2021 because the sector is a default exposure for rebounding global growth and reflation with trading multiples low, JP Morgan said.
Previous economic crises suggest the sector has not peaked yet, the bank said as it started to reduce its 'extreme overweight' sector view with macro catalysts expected to recede during the year - including fiscal consolidation and slowing credit growth in China and the potential for the dollar to strengthen in the second half if the Federal Reserve tapers its bond-buying programme.
JP Morgan reduced its rating on Anglo American from 'overweight' and upped its price target to £29 from £28.50, while analyst Dominic O'Kane also upgraded his rating on Antofagasta to 'neutral' from 'underweight' and set a price target of £11.70, up from 870p.