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22 Jan 2021 | 15:22

Broker tips: Hargreaves Lansdown, Bango, Bunzl, British Land

(Sharecast News) - Analysts at Canaccord Genuity raised their target price on financial services firm Hargreaves Lansdown from 1,493.0p to 1,695.0p on Friday following the strong market rally into the 2020 calendar year-end. Canaccord said it opted to revisit its assumptions on Hargreaves Lansdown after the FTSE 100 picked up 16% in November and December, resulting in a 10% upgrade to its 2021 earnings per share estimates, 17% to 2022 and 10% upgrade in 2023.

The Canadian broker said strong markets will have helped drive assets under administration higher than its original forecasts and also added that the Covid-19 pandemic, lockdowns and increased market volatility had also been conducive to increased client acquisition.

"We believe this has also resulted in continued, elevated share trading activity," said Canaccord, which also maintained its 'hold' rating on the stock.

"These tailwinds more than compensate for the headwind of reduced interest income, which we have downgraded significantly in FY22 and FY23, owing to the low base rate."

Liberum started coverage of Bango with a 'buy' rating, arguing the company was positioned to gain from more spending on digital content.

Bango's key products are online payments and data monetisation, both of which will benefit from increased spending on digital content and merchants advertising to increase their share of this spending, Liberum said. Liberum initiated coverage with a target price of 260.0p with the shares standing at 181.0p at publication time.

Liberum, a corporate broker for Bango, predicted Bango's earnings before interest, tax, depreciation and amortisation would rise by 13 times between 2019 and 2022. Earnings per share are forecast to grow at a compound annual rate of 38% from 2020 to 2022, it added.

Bango supports about 6.0m subscriptions for streaming content such as Amazon and Netflix, giving it recurring revenue and increased visibility, Liberum said.

"The value of online payments Bango processes has been doubling every year," Liberum analyst Janardan Menon wrote in a note to clients. "Data monetisation revenues are surging and are expected to be the biggest driver of future growth. After 70% revenue growth and c.800% EBITDA growth in 2020, we expect continued strong growth in future years."

Barclays cut its rating on Bunzl shares to 'equal weight' and reduced its price target on the distribution and packaging group, citing changing post-pandemic trends and a shift away from plastic packaging.

2020 was a strong year for Bunzl and disposable products during the Covid-19 crisis but the opposite could be true in years ahead, Barclays said.

Post-coronavirus trends and a move away from single-use plastics by consumers could hit the FTSE 100 group, the bank said. Single-use plastics make up about 15% of Bunzl sales and the company has benefited from high demand for items such as sanitisers, gloves and face shields during the crisis.

"We conclude both [trends] could weigh on Bunzl's structural organic story," Barclays said in a note to clients. "The uncertainty this creates for the incremental buyer means we see greater value or structural growth opportunities elsewhere in the sector."

Barclays cut its rating on Bunzl shares from 'overweight' and reduced its price target to £23.50 a share from £27.50.

Deutsche Bank upgraded British Land on Friday as it took a look at the European real estate sector.

The German bank, which kept its price target on British Land unchanged at 490.0p, lifted its stance on both to 'buy' from 'hold'. It noted that British Land is already trading at a 35% discount to spot net asset value and a 25% discount to FY22 estimated NAV and said the market is already pricing in too much asset value downside.

More broadly, the bank said that looking "beyond vaccines" - which are not a guarantee of a silver bullet - 2021 is likely to be a challenging year for the European real estate sector.

"The first year of a new presidency in the US, the Brexit impact in the UK, a big election year in Germany, and prolonged lockdowns and social distancing as the world fights Covid-19 could cause meaningful volatility," it said.
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