Broker tips: Solid State, Zigup

(Sharecast News) - Analysts at Berenberg initiated coverage on value added electronics group Solid State with a 150p target price and a 'buy' rating on Tuesday, stating the stock represented a "well-placed defence opportunity". Berenberg said its forecasts for Solid State, which supplies the industrial and defence markets with durable components, incorporate a "conservative new capacity ramp-up" despite strong demand. From FY28, Berenberg expects mid- to high-single-digit growth rates and forecast EBIT margins to continue to rise from mix and volume improvements.

Given the company's placement between "strong defence tailwinds", with defence making up 30% of revenues, as well as well-invested foundations, quickening large order cadence, numerous international high-quality blue-chip customers and an attractive valuation, it thinks this Solid State represents "an excellent way" to buy into the defence theme.

"We think that the company's market penetration to date, established defence relationships, long-term structural defence tailwinds and strong capital foundations demonstrates that Solid State is a compelling opportunity at an attractive valuation," said the German bank.

Berenberg also noted that Solid State currently trades on a FY26 price-to-earnings ratio of 15.9x and enterprise value/EBIT of 11.7x.

Panmure Liberum hiked its target price on vehicle rental provider Zigup from 550p to 600p on Tuesday, stating the firm's interim earnings had confirmed that trading was "at the high end of consensus"

It also said Zigup's H1 figures pointed to "good cashflow generation" and a strategic initiative to simplify the business in the UK and Ireland that was set to deliver incremental savings of £20m by FY28.

"We upgrade our FY26-FY28 PBT forecasts by 2%, 6% and 12% respectively and raise our target price from 550p to 600p," said Panmure Liberum, which has a 'buy' rating on the stock.

In addition, Panmure Liberum highlighted that ExCo members' interests were now aligned with investors following the implementation of an incentive plan with a hurdle rate of 521p, highlighting the potential management see across the business.

"With ZIGUP trading on a CY26E PE rating of 7x and offering a dividend yield of 7%, it presents a significant investment opportunity as it enters a new phase of PBT growth and cash generation," concluded Panmure Liberum.





Reporting by Iain Gilbert at Sharecast.com