- Dr. Martens
- 26 April 2024 17:19:36
Source: Sharecast
The bank said that having stuck to its ‘overweight’ rating through several profit warnings, it is now downgrading due to weak Google trends/Similarweb data and a big second-half weighting, given macro risk.
It also pointed to increased capital intensity via store growth, pressuring EBIT margin/return on capital employed, and greater conviction elsewhere in its coverage, given the wider de-rating of consumer stocks.
Elsewhere, JPMorgan Cazenove upgraded M&G to ‘neutral’ from ‘underweight’ as it revisited the UK life sub sector following a period of poor relative performance.
It argued that UK life insurers offer superior growth potential to the European Insurance sector in addition to offering the highest capital return.
M&G was upgraded "given a reassessment of its growth profile and balance sheet". JPM said it reckons M&G could generate around 8% compound annual growth rate in operating profit, supported by a recovery in asset management and earnings and stronger growth from the PruFund product in Wealth.
JPM reiterated its relative ‘underweight’ on Phoenix, which it said reflects its relatively high price/earnings-to-growth ratio and high debt leverage.
The bank said ‘overweight’ rated Aviva offers the most diversified UK insurance business, with strong management and an attractive total capital return.
JPM reiterated its ‘overweight’ rating on Legal & General and Just Group. L&G offers a strong earnings growth outlook, with scope for a positive surprise on capital return with the arrival of a new CEO, given a strong capital position, it said.
"Similarly, Just Group is set to generate the strongest earnings growth in the sub-sector, but is also moving into a position of surplus capital with upside surprise potential on dividends."