(Sharecast News) - Berenberg upgraded Harbour Energy on Wednesday to 'buy' from 'hold' and lifted its price target on the stock to 360.0p from 280.0p as it said that cash flow supports higher returns.
Harbour Energy reported its FY23 results on 7 March and Berenberg said that most of the key figures were in line with those reported in the January trading update.
"Importantly, despite recent headlines, the company remains confident in completing its merger with Wintershall Dea, which will transform the portfolio in terms of scale and diversification," the bank said.
It said Harbour's deal to take control of most of Wintershall Dea's upstream portfolio adds significant scale to the business and diversifies the portfolio away from the UK's challenging fiscal system.
"Based on our initial modelling, it significantly increases cash flow and potential for increased shareholder returns - publication of the prospectus (expected in Q2 2024) is likely to provide more detail and reduce some of the uncertainty in our initial forecasts," it said.
Berenberg noted that the company has guided to a 5% increase in dividends and said it expects the higher cash flow to support dividend per share growth over the medium term. The German bank also said it was updating its model to incorporate FY24 guidance from both Harbour and Wintershall Dea, and give credit for tax deductibility of decommissioning provisions in its valuation.
Analysts at Jefferies lowered their rating on hospitality giant Intercontinental Hotels from 'buy' to 'hold' on Wednesday but raised their target price on the stock from 6,400.0p to 8,400.0p.
Jefferies said IHG was "a long-term compounder", with a growth algorithm that rivals Marriott's. However, it noted consensus appears "well-set for 2024/25", and said its valuation was full and that, alongside weak core US growth, meant it now felt it right to move to the sidelines.
The broker added that key catalysts should arrive in the second half, with credit card opportunities, an inflection in net unit growth and greater visibility around the US market.
"We value IHG using a DCF methodology. Our price target rises from £64 to £84, driven by: 1) introducing explicit forecasts for 2026-27, with growth that is higher than our medium-term assumptions, 2) rolling forward DCF by one year to 2034E, 3) factor in stronger-than-expected margins in EMEAA and Greater China, 4) factor in a reduced share count from buybacks," said Jefferies.
"We raise EPS by +2% in FY25E. EBIT margins came in stronger than expected for FY23 in EMEAA and Greater China. We model continued margin accretion on this new higher base, which drives more meaningful EBIT and net income accretion in FY25 and outer years. Diluted EPS rises more modestly as we factor in a higher share count (due to recent share price appreciation)."
RBC Capital Markets initiated coverage of Marlowe on Wednesday with an 'outperform' rating and 630.0p price target.
It noted that following the sale of its software & services assets on 22 February for £430.0m, Marlowe's stock rebounded by around 18%, reflecting "a slight reversal of investor sentiment".
However, it said the shares were still trading at a significant discount to peers.
"We believe the remaining underlying business is solid with annual organic growth of 5% and margins of 12-14% and efficiencies should drive further margin improvement by 1-2% by F2027E," RBC said. "With the new CEO search underway, the short-term business strategy is intact. We expect the acquisition strategy will return longer term, but at a more moderate pace."
JPMorgan Cazenove lifted its stance on Flutter Entertainment on Wednesday to 'overweight' from 'neutral' and hiked the price target to 21,300.0p from 16,300.0p, noting the upgrade was driven mainly by its more positive stance on the US, for which it has increased its revenue and EBITDA estimates by double digit percentages in FY26 onwards.
This qa driven in part by a larger total addressable market forecast, JPM said, adding that with US legalisation coming through state by state, it now feels increasingly confident about the TAM opportunity crystallising.
JPM also pointed to further market share gains, including within iGaming, which remains underappreciated by the market, and higher margin assumptions, largely underpinned by scale. The bank said Flutter's market leadership across key geographies, underpinned by its strong moat - leading product, scale, brand - puts it in a favourable spot to capture growth opportunities across markets, while keeping it well-positioned to efficiently tackle regulatory headwinds.
"As a result, the growth profile is appealing, with EBITDA CAGR FY 23-26e at more than 25% as US profitability ramps up," it said. "Overall, we believe that 2023 provided further evidence of FanDuel's strong positioning in an increasingly promising US market, demonstrating leaps of progress and the resilience of the business model, as confirmed at the Q4 update in Jan...which should drive further upside potential for the shares.