Broker tips: Rathbones, Travis Perkins

2nd Apr 2025 16:02

(Sharecast News) - RBC Capital Markets upgraded Rathbones on Wednesday to 'outperform' from 'sector perform' and lifted the price target to 2,000p from 1,850p, citing underappreciated growth and attractive capital return prospects.

"As full integration of Investec Wealth nears, and the financial benefits of the deal fully accrue, RAT is a full-service wealth manager operating at scale," RBC said. "Timely arrival of new management offers an opportunity for further strategic progression, to ensure the enlarged franchise achieves its organic growth potential," it added.

It noted that Rathbones is trading at a material discount to peers despite stronger near-term growth, and said it offers sector-leading capital returns.

"We see a compelling value opportunity and upgrade to outperform," the bank said.

Berenberg has slashed its target price for Travis Perkins more than a quarter after the building materials group's disappointing annual results this week, saying it needs more evidence of a turnaround before taking a more positive view.

The German bank cut its target price for the shares from 880p to 650p and kept a 'hold' rating on the stock.

TPK's share price dropped by more than 10% on Tuesday after the company delivered its results for 2024. While there weren't any material surprises in the full-year figures, the outlook guidance - for flat adjusted EBITDA in 2025 - was weaker than the markets had been expecting. As a result, Berenberg haslowered its EBITDA forecasts for TPK by around 20% over the next three years.

"The company has suffered from a combination of challenging market conditions as well as - in its own admission - the result of some poor strategic decisions," said Berenberg analyst Harry Goad. "Furthermore, the much-hoped-for strategic and operational reset under the new CEO, Pete Redfern, who assumed the role in mid-2024, ended abruptly with his resignation on - sadly - health grounds in March."

Looking at 2025, TPK said merchanting conditions remain "challenging" with prices and volumes likely to see a "modest decline". Things over at the Toolstation division look more positive, though it only makes up a small part of the whole business.

Goad said TPK does have the potential to deliver on self-help initiatives and there is also scope for a market recovery. However, a 'hold' rating was kept "as we await evidence of positive traction on either or both", he said.