Share Prices & Company Research

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18 Feb 2021 | 14:59

Broker tips: Berkeley, Marlowe, Ashtead

(Sharecast News) - UBS lifted its price target on housebuilder Berkeley to 6,037.0p from 5,882.0p on Thursday and reiterated its 'buy' rating as it highlighted upside of more than 7,000.0p. UBS said the size and scale of Berkeley's land bank is its key differentiator and its analysis suggests that not only can it beat its current six-year target to FY25, but that for the following six years to April 2031, from its already owned and controlled land bank, the group can increase its pre-tax profit target to around £650.0m to £700.0m a year.

"Trading at 1.5x 2021 cal P/NTAV Berkeley's historic premium to the sector is all but eroded," said UBS. "However while EBIT growth will likely lag housebuilder peers near term, already owning the land to deliver profit before tax up to 15% higher than consensus in FY24, and then to continue at this level until FY31, there is considerable deep value.

UBS stated that Berkeley was "worthwhile considering again", adding that with nearly three times the length of land bank and three times the build work in progress of others, using a liquidation value to try to capture the value of balance sheet strength, the firm offered an upside of more than 7,000.0p.

Analysts at Berenberg raised their target price on security systems firm Marlowe from 660.0p to 900.0p on Thursday after the group announced "a set of highly ambitious growth targets" for next three years during its "impressive and informative" virtual capital markets day event.

Berenberg stated that over the next three years, Marlowe will target £500.0m of revenues and £100.0m of underlying earnings, to be achieved through a combination of 7% organic growth per annum, 20% margins, 90% cash conversion and a continuation of its existing mergers and acquisitions strategy.

The German bank stated that while Marlowe had "clearly" set itself "an aggressive" target, it was also one its analysts believe can be achieved, given the company's track record to date and the scale of opportunities that already exist in its various end-markets.

Berenberg, which reiterated its 'buy' rating on the stock, also pointed to a roughly 140% upside if Marlowe can meet its targets.

Ashtead shares rallied on Thursday as Goldman Sachs initiated coverage of the stock at 'buy' with a 5,100.0p price target, highlighting re-rating potential.

"We think there is room for further re-rating as we believe we are at the beginning of an upgrade cycle supported by improving cyclical trends," GS said.

"Furthermore, we expect a return to double-digit organic revenue trends over the next 12 months driven by cyclical and secular tailwinds of growing rental penetration, along with solid free cash flow generation which we expect will drive further re-rating in the shares."
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