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Broker tips: Tritax Big Box, Standard Chartered, Jet2

By Iain Gilbert

Date: Thursday 02 Feb 2023

Broker tips: Tritax Big Box, Standard Chartered, Jet2

(Sharecast News) - Analysts at Berenberg lowered their target price on real estate investment trust Tritax Big Box from 190.0p to 170.0p on Thursday, stating repricing was now underway.
Berenberg said Tritax Big Box's mixed Q4 trading update highlighted "a significant valuation impact", down 15.2% year-on-year on a like-for-like basis, as investment markets rapidly repriced asset values to reflect shifting risk-free rates and debt costs in the wake of Liz Truss' mini-budget.

The German bank stated that with the 10-year risk-free rate now approximately 120 basis points below peaks, yield spreads now reflecting "a healthy spread" and the potential for a UK recession to drive risk-free rates lower still, it continues to think that the worst of the yield expansion has now likely been reflected in asset valuations.

"While in-place tenants are high quality and income is secure, we question the occupational appetite for large format warehousing given continued macroeconomic pressures and expect this to result in slowing organic growth and slowing development activity, lowering returns," added the analysts, who stood by their 'hold' rating on the stock.

"We make several forecast changes following the Q4 trading update, adjusting forecast CPI rates in line with those of our economists, lowering development volumes and reducing outer-year market growth forecasts. These changes reduce our NTA forecasts by c18% but increase our EPS estimates by c8%, primarily resulting from lower (NTA-derived) external asset management costs."

Goldman Sachs downgraded its stance on shares of Standard Chartered on Thursday to 'neutral' from 'buy' on Thurrsday, pointing to the fact the shares had outperformed the European banks sector by 33% since August 2021 on the back of divergent rate hiking paths, and said this had now played out.

GS also noted that consensus appeared to increasingly reflect the benefit of higher rates with 2023 net interest income forecasts up 18% over the last year.

Goldman also highlighted that it sees more limited benefit from higher policy rates in Hong Kong sees better opportunities in UK domestic peers Natwest and Lloyds.

Analysts at Canaccord Genuity reiterated their 'buy' rating on airline Jet2 on Thursday, citing a climbing outlook and an increased probability of profit delivery.

Canaccord Genuity stated Jet2 bookings had "strengthened" and highlighted that average load factors were now "slightly ahead" of winter 2018-19 levels at the same point, on 24% more seat capacity, and said achieved pricing and margins were looking "significantly higher".

For the 2024 trading year, which includes two Easters, Canaccord said the seven-month summer 2023 schedule sees seats offered up 6.6% year-on-year and "encouraging" forward bookings to date.

The Canadian bank said winter unit losses had reduced, with it now anticipating a second-half pre-tax loss of £122.0m, compared to £163.0m for H2 2018-19.

Canaccord pointed out that costs were up, with FY24 seeing cost inflation, as well as a "supportive" revenue outlook and stated the group was likely to see more repeat customers and better revenue stickiness.


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