Broker tips: Duke Royalty, Britvic, Drax
By Iain Gilbert
Date: Thursday 16 Sep 2021
(Sharecast News) - Analysts at Canaccord Genuity raised their target price on finance company Duke Royalty from 45.0p to 52.0p on Thursday following the firm's "resilient" full-year trading performance.
Canaccord, which also reiterated its 'buy' rating on the stock, stated that in the 12 months ended 31 March, Duke had delivered cash revenue of £11.0m, up 7% year-on-year despite the impact of the Covid-19 pandemic, almost exactly in line with its forecasts.
The Canadian bank said Duke's investment portfolio experienced £9.9m of net fair value gains in the period, well ahead of its forecast of £2.2m, which reflected a partial reversal of the £15.6m net fair value and impairment write-downs taken a year prior as a result of the pandemic.
"The net FV uplift is reflective of an improving outlook and resumption of full payments for the majority of royalty partners which were in forbearance," said Canaccord.
Deutsche Bank downgraded Britvic to 'hold' from 'buy' on Thursday as it said there is now insufficient upside to the shares to maintain a 'buy' stance.
The bank noted that Britvic shares are within 1% of its unchanged price target of 950.0p and have had a solid performance year to date.
Britvic's shares are up 15.6% YTD, outperforming the Stoxx 600 food and beverage index by 4.6%. The shares have also outperformed UK-listed soft drinks players Fever-Tree and CCH, but have underperformed Coca-Cola Europacific Partners.
Deutsche said the third-quarter trading update in July suggested the company continued to benefit from a reopening within GB, France and Brazil.
"At the same time, we note that Britvic - like most staples companies - is likely experiencing higher inputs, which it will need to offset with higher pricing," it added.
Drax shares powered ahead on Thursday after Barclays hiked its price target by 75% to 960.0p, implying 120% upside potential.
The bank, which rates Drax at 'overweight', said that since its last update in May 2020, there have been notable improvements to the Drax investment story but little change to the share price.
"We believe the current price is an attractive entry point," Barclays said.
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