Broker tips: B&M, Aviva, Sage, Keller
By Iain Gilbert
Date: Friday 10 Oct 2025
(Sharecast News) - Berenberg has slashed its target price for B&M by almost a quarter after a profit warning from the discount retailer this week, but kept a 'buy' rating on the stock on the back of its "deep value".
On Tuesday, the company guided to first-half adjusted EBITDA of £198m for the 26 weeks to 27 September, down from £274m the year before, and a full-year result of £510m-560m, down from £620m previously.
"B&M's H1 2026 update on 7 October delivered the cut to guidance under the new CEO that many had feared. That said, we think the news was largely already reflected in the group's low valuation (FY1 PER 8.5x), and the rebasing of expectations has the potential to serve as a 'clearing event'," Berenberg said in a note on Friday.
The broker said the company's "strong foothold" in the UK discount retail sector provides a firm foundation for the 'Back to B&M Basics' plan, which includes price cuts on key value items, resetting its 'Managers Specials' promotions strategy, and refocusing product ranges.
"It will take time for the benefits to flow, and execution is key, yet we are encouraged by the decisiveness of the actions already taken. The deep value offered by the shares (including a c9% FCF yield) gives little credit for any profit recovery, in our view, and the c9% total dividend yield pays investors well for waiting."
Berenberg reduced its target price from 590p to 450p, which still represents major upside from Friday afternoon's 232.7p level.
KBW downgraded Aviva to 'underperform' on Friday, with an unchanged price target of 650p, which offers around 5% downside, after a strong run in the share price.
"We are also swayed by what we believe are relatively elevated valuation multiples against the Big 5 peers even if we credit the group for a further 10% increase in earnings guidance against KBWe / consensus in the 13-Nov business plan update," it said.
"After a strong share price run that we think has been driven by consensus catching up with the Direct Line upside, we think the risk/reward is now poor as UK macro and UK motor fundamentals remain weak."
Sage Group rallied on Friday after Citi placed the shares on 'positive catalyst watch' into full-year results in November, saying it expects a "better-than-feared" update.
Citi said Sage has been delivering rather resilient results in an uncertain backdrop, however, small moderation in growth and AI disruption related concerns have been stock overhangs.
The bank said it had revisited its positive investment thesis with a detailed look at the demand environment (SMEs) as well as bottom-up building blocks of Sage's growth.
"Our work supports confidence that Sage has right levers to sustain the growth, and potential to accelerate in a better macro set-up," it said. "AI would remain key topic of debate, at the same time Sage efforts on bringing and commercialising AI use cases should be more visible in FY26."
Citi, which reiterated its 'buy' rating and 1,500p price target on the stock, noted that the shares have underperformed year to date and said it sees scope for consensus upgrades.
RBC Capital Markets initiated coverage of Keller Group on Friday with a 'sector perform' rating and 1,540p price target, noting that since 2019, Keller has executed well, but said it thinks margins are reaching a structural ceiling.
"Transformational growth is the next step and while it has significant firepower to buy and build, it lacks a strategy," RBC said. "Without a plan, US construction spend is the key earnings driver (81% correlation since 2006), which has a mixed near-term outlook.
"Given this backdrop, we think Keller should hold a CMD to provide 1) a clear steer on how and why margins are sustainable and 2) an above market growth strategy. Until this occurs, we think investors will remain on the sidelines."
RBC said the stock's valuation reflects low earnings growth and no growth visibility. The bank's target price was based on a 7x CY26e price-to-earnings multiple versus Keller's 8.2x 10- year average.
"We think a discount reflects Keller's low earnings growth, with a mixed outlook for US construction and limited upside to margins," it said.
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