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05 Mar 2021 | 10:14

Broker tips: BT Group, Vistry Group, B&M European Value Retail

(Sharecast News) - Credit Suisse reiterated its 'outperform' recommendation for shares of BT Group, labelling the stock an 'inflection story' and arguing that it was set to benefit from several tailwinds - including rising inflation and government bond yields. According to Jakob Bluestone, Ben Lyons, and Evgeny Kudinov, the telecommunications group was set to extend the reach of its fibre-to-the-premises offering to 16m premises by financial year 2025.

In turn, the shift towards fibre would boost its average revenues per user, as at rivals Deutsche Telekom and KPN, they said.

A "strong" recovery from the hit taken from Covid-19 was also in the works, they said, starting from the first quarter of the 2022 financial year.

The analysts were expecting earnings before interest, taxes, depreciation and amortisation would grow by 2.0% and 2.8% in financial years 2022 and 2023, respectively.

BT was "well positioned" as regards rising inflation and bond yields, as it moved its consumer contracts to CPI+3.9%, they said.

Rising inflation would also cut its pension deficit, to the tune of £500m for each 0.7% increase in inflation, as per the latest actuarial review.

Analysts at Canaccord Genuity bumped up their target price on shares of homebuilder Vistry Group following its latest full-year numbers, support measures in the Budget and its management team's track record.

The group delivered a slightly better-than-expected full year result, having successfully navigated a "difficult" 2020, and was now in "good shape" and set for a "sharp" increase in profits in 2021 "along with a more comfortable balance sheet".

Furthermore, not only had the year started well, "with the boost from Wednesday's budget, we have greater confidence in the Group reaching its profit targets this year," they said.

Indeed, they noted how the group had already secured 64% of its forward sales for 2021.

"Over the last few years, management has propelled Vistry into being a top 5 UK housebuilder and established a leading Partnerships business," they added.

Liberum upped its price target on shares of B&M European Value Retail to 650p from 600p on Friday following the company's trading update a day earlier.

The broker said the update and raised guidance "yet again shows the strength of B&M's discount, general merchandise offer and predominantly retail park sites, which have left it primed to benefit during the lockdowns, as well as being a long-term structural winner".

Liberum said the retailer's value offer is driving new customer acquisition, while maintaining margin strength and delivering broad category growth.

"Free cash flow generation has accelerated and net debt: EBITDA should come in around circa 1x at year-end, even following the £450m of recent special dividend pay-outs," it said.
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