Broker tips: Redrow, IAG, Vistry
By Digital Look
Date: Thursday 21 Mar 2024
(Sharecast News) - RBC Capital Markets downgraded Redrow on Thursday to 'sector perform' from 'outperform' following a period of outperformance and the fact the share price is now linked to that of Barratt Developments.
The bank, which left its price target unchanged at 750p, said that when Barratt made its play for Redrow at 1.23x P/B it did not believe the offer reflected the true value of Redrow's business.
"At the time we noted that for more than 70% of its listed life Redrow had traded at a higher valuation than the offer made by Barratt," it said.
"Six weeks on and no other bidder has thrown their hat in the ring. It seems to us therefore that Redrow's share price is, for now, linked to that of Barratt's."
RBC Capital Markets upgraded BA and Iberia owner IAG on Thursday to 'outperform' from 'sector perform' and lifted the price target to 220p from 200p.
The bank said IAG has consistently delivered, and since it relaunched coverage of the stock last June, it has increased its IAG 2025 earnings per share estimate by almost 60%, while the share price has risen only 3%.
"IAG now generate the second highest margins (behind Ryanair), but by some metrics trade on the cheapest valuation in our airline coverage," it noted.
"Airline capacity data now suggests the North Atlantic capacity is set to be more of a tailwind rather than a headwind for IAG's BA and Aer Lingus this summer," RBC said, adding that it sees upside to consensus expectations in 2024.
Berenberg has hiked its target price for partnerships-focused affordable-housing builder Vistry by 15% but kept a 'hold' rating on the stock, saying the company is "well positioned, but delivery risk remains".
The broker has lifted its target for the shares from 894p to 1,030p, but said the recent strong share-price performance means the stock offers fair value for now.
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