Broker tips: Standard Chartered, Tate & Lyle, Anglo American

26th Feb 2024 16:02

(Sharecast News) - Berenberg upped its price target on 'buy' rated Standard Chartered on Monday to 1,050.0p from 1,000.0p as it said that growth and returns are undervalued.

Berenberg said the 2023 results last week "provided clear confirmation that recent improvements in the bank's returns can be sustained".

"Importantly, revenues and net interest income (NII) can grow even as interest rates fall. The bank's commitment for FY 2026 expenses to be below $12.0bn also provides an antidote to investors' concerns about cost control," it said.

The German bank said that while the shares rose by around 5% following the results, the bank's 0.5x TBV valuation continues to poorly reflect Berenberg's FY26 estimate for return on tangible equity of 11.3% versus a 12% target.

The new price target values the bank on 0.8x TBV versus 0.5x currently.

Analysts at Berenberg also lowered their target price on food ingredients manufacturer Tate & Lyle from 890.0p to 860.0p on Monday due to FX headwinds.

Berenberg noted that Tate & Lyle had reported its third-quarter trading update on 21 February, with sales guidance for the year being reduced to "slightly below" FY23 levels due to lower pricing as a result of lower raw material costs and its pass-through pricing policy.

Meanwhile, adjusted underlying earnings guidance for 7-9% growth in constant currency remained unchanged. However, Berenberg said it had still opted to downgrade its FY24 earnings per share estimates by 3% as a result of currency exchange headwinds.

Looking ahead, the German bank noted that the balance of Tate's organic growth between volume and mix will depend on how the consumer environment improves throughout the year, stating that so far in Q4, volume momentum had been positive, and that management expects this to continue throughout FY25.

Anglo American investors just need a little more patience, according to analysts at Jefferies who reiterated their 'buy' rating on the mining company ahead of what it sees as an inevitable recovery in the share price.

The broker claimed that negatives were mostly priced into the stock and that consensus expectations "seem too negative", noting that the company was now "at a turning point".

Jefferies said it expects "significant relative outperformance for Anglo's shares over the course of this year and beyond", as it kept a 2,500.0p target price, indicating around 40% upside from current prices.

"The path to recovery for Anglo after a difficult 2023 includes meeting recently rebased guidance, pursuing portfolio strategies to unlock value, and benefiting from: 1) increased exposure to copper (nearly 40% of Anglo's NPV), 2) cyclical upside in diamonds and PGMs, and 3) ongoing strength in iron ore and met coal prices," said Jefferies. "The Anglo recovery will take time to fully play out. But it is coming, in our view."

Jefferies added that, even if Anglo was unable to improve operationally over the coming year, it still sees a chance that an activist gets involved or another miner approaches it for a merger.