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Broker tips: SSP, Spectris, YouGov

By Alexander Bueso

Date: Thursday 20 Jun 2024

Broker tips: SSP, Spectris, YouGov

(Sharecast News) - Berenberg downgraded its stance on shares of Upper Crust owner SSP to 'hold' from 'buy' on Thursday and cut the price target to 180p from 280p as it said first-half results outlined earnings risks.
"We are fans of the global travel concession market and believe that the structural growth drivers in the industry will support the growth of SSP into the medium term," the bank said.

"That said, we think the majority of the group's growth will now stem from North America and the rest of the world (RoW - i.e. Asia-Pacific, eastern Europe and the Middle East), where the business has significant minority interests.

"Given the potential headwinds to the UK&I (UK & Ireland) rail business, we believe that there are risks to earnings generation over the medium term, with a greater share of SSP's profitability generated in regions with high minority interests."

This has led Berenberg to cut its earnings per share forecasts and it now sits below consensus EPS in FY24, FY25 and FY26.

"Given this potential headwind to near-term earnings, we downgrade our recommendation to hold, with a new price target of 180p," it said.

JPMorgan Cazenove cut its price target on Spectris on Thursday to 2,750p from 2,950p as it downgraded forecasts following the company's profit warning a day earlier.

"Spectris's profit warning yesterday confirmed our thesis that slowing orders meant consensus forecasts were too high unaided by several tough end markets including China, life sciences and more recently EVs," it said.

"The updated guidance still relies on at least mid single digit organic growth in H2 despite commentary suggesting that trends in key end markets are not improving and a higher H2 weighting than is typical."

As such, JPM said it sees risk to the updated guidance and reduced its forecasts by around 5% below guidance, as it continues to see risk to forecasts, unless order intake picks up significantly in the next couple of months.

"Moreover, with the portfolio rationalisation complete, the margin expansion story less exciting from here (in our view) and uncertainty over order intake, we see little reason to own the shares currently," it said.

"While shares have fallen 20% year-to-date, we remain 'underweight' and continue to see risk/ reward as unfavourable."

Berenberg slashed its price target on YouGov on Thursday to 1,200p from 1,350p after the company warned that full-year profits and revenue will be lower than expected due to slow demand in its data products division.

The company said that since its half-year results, sales bookings have been lower than expected. As a result, it now expects reported revenues for FY24 to be around £324m to £327m.

Berenberg noted that the mid point of the range is 5% below consensus expectations.

"In line with our stated strategy, the company had invested in the business to set up for an acceleration in growth in H2," YouGov said. "While we have seen an improvement in the second half, the growth was below expectations; therefore we now expect full-year group adjusted operating profit to be £41-44 million."

The mid point of the range for adjusted operating profit is 32% lower than consensus estimates, Berenberg said.

Berenberg said it was moving its forecasts to the bottom of the range and reducing its FY24 revenue and adjusted EBIT forecasts by 4% and 37% respectively, hence the target price cut.

The bank said: "Management commented that it will look to take action on costs in FY25E and therefore we anticipate a margin recovery from the trough margin in FY24E. In terms of FY25E estimates, we reduce our revenue, adjusted EBIT and adjusted EPS by 5%, 18% and 19% respectively."

Berenberg kept the shares at 'buy'.


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