Broker tips: Travis Perkins, Blue Prism, Hargreaves Lansdown.


Analysts at Canaccord Genuity reiterated their 'buy' rating on builders' merchant Travis Perkins on Friday after having finally disposed of its plumbing and heating business.

Source: Sharecast

Canaccord stated Travis Perkins' move to dispose of the unit would likely come as a relief to the market and follows its demerger from Wickes in April and marked the completion its business portfolio simplification.

"After delays and challenges caused by Brexit uncertainty and the pandemic, the group has in short order achieved two big strategic steps this year," said Canaccord.

The Canadian bank, which reiterated its 1,725.0p target price on the stock, also stated that the strength of TP's balance sheet and its lack of appetite and desire for any big M&A moves meant that returning the sales proceeds to shareholders was "a sensible move" and highlighted that notwithstanding the "positive impact" of the expected share buyback, the disposal was expected to be earnings dilutive for 2022.

"However, given the strong trading currently being enjoyed, we would not be surprised to see consensus underlying earnings move up over the coming months, assuming trading holds up into H2 2021. The disposal should be well received by the market, and we continue to see an attractive outlook for the newly simplified, trade-focussed group," concluded the analysts.

Analysts at Berenberg lowered their target price on software and services provider Blue Prism from 1,375.0p to 1,100.0p on Friday, stating recent events had given it cause to reflect once again on the key issues at the firm.

Firstly, Berenberg noted that Blue Prism had again revised its growth expectations downwards in its first-half trading update and asked whether the "significant revision" to its growth expectations was simply a case of new conservatism at the company or evidence of competitive pressures.

Next up, the German bank asked if the IPO of UiPath had renewed investors' focus on Blue Prism's competition and stated that both events posed "a number of difficult questions" for the company in terms of growth, product, sales strategy and the wider competitive environment.

"Although priced at a substantial discount to UiPath, Blue Prism must provide comfort on each of these points before we can become more positive," said Berenberg, which also reiterated its 'hold' rating on the stock.

Citi downgraded its stance on shares of Hargreaves Lansdown to ‘sell’ on Friday as it argued that after very strong current operating momentum, optionality looks more skewed to the downside from here.

The stock's valuation looks rich, revenues are more likely-than-not to fall next year, and net new business is likely to slow from the exceptionally strong 11.5% annualised growth rate over January to April, Citi said.

"We see some upside to consensus, but in our view the risks outweigh the positives and so we downgrade our rating on HL shares to sell from neutral, new target price £15.6.

"We are constructive on UK wealth secular growth, which we see as one of the few credible structural growth stories within European financials.

"As the leader in the UK D2C platform market, HL is well-positioned to benefit from the trend of off-platform assets moving onto platforms."

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