Broker tips: NatWest, Helios Towers

9th May 2024 15:52

(Sharecast News) - NatWest's share-price surge since the start of the year could well continue, according to analysts at Barclays, who hiked their target price for the stock on Thursday.

Barclays reiterated its 'overweight' rating on the stock, which has gained 15% over the past month and 45% since the start of the year.

"Despite strong share-price performance (+45% YTD), we continue to see significant upside," Barclays said in a research note.

As a result of higher earnings and lower cost of equity, Barclays hiked its target price from 330p to 400p, a level not seen since 2015, compared with Wednesday's closing price of 317p.

"EPS momentum is turning positive, we are 10%+ ahead of [consensus], and with an exit of UK government firmly in sight, we expect an ongoing re-rating on strongly growing tangible net asset value," Barclays said.

Analysts at Berenberg slightly raised their target price on telecommunications tower infrastructure company Helios Towers from 170.0p to 185.0p on Thursday, stating the group was now "poised for value creation".

Berenberg stated that following a period of "significant platform expansion", it believes Helios to be set for "strong returns" on incremental invested capital in the coming years.

"Combined with its attractive end-market growth dynamics, and now demonstrable protection from currency movements and inflation, as well as the prospect that 'higher for longer' rates may now be priced in, Helios offers highly attractive reward for its risk, in our view," said Berenberg, which reiterated its 'buy' rating on the stock.

"Helios will retain its focus on organic growth and co-location lease-up to drive improvements in ROIC out to FY26 - for which it has set a target tenancy ratio of 2.2x. Given Helios's recent performance, we are confident this is achievable."

The German bank added that Helios trades on a 7.6x FY24 enterprise value/underlying earnings ratio, by its estimates.