Broker tips: Raspberry Pi, Schroders, RHI Magnesita, Fresnillo
By Iain Gilbert
Date: Wednesday 05 Feb 2025
(Sharecast News) - Jefferies downgraded Raspberry Pi on Wednesday to 'hold' from 'buy' "pending visibility of recovery" but hiked its price target on the stock to 770.0p from 448.0p.
The bank said DeepSeek's approach to low-cost AI training and inferencing should result in the faster proliferation of edge AI across industrial applications.
"Raspberry Pi is well positioned to benefit, with edge AI and semiconductor sales likely to become significant contributors over 3-5 years," it said.
However, it also said that near-term visibility is low as destocking persists and that it has cut its estimates. Based on the lower units guidance, Jefferies cut its 2024 revenue estimate to $260mn from $282m. This takes its adjusted EBITDA estimate for 2024 to $36.3m, in line with the trading update guidance of at least $36mn.
RBC Capital Markets upgraded Schroders on Wednesday to 'outperform' from 'sector perform' ahead of full-year results on 6 March.
It said an evolution of the growth strategy from the new chief executive at the results is a potential catalyst for both consensus earnings upgrades and a price-to-earnings multiple expansion.
The bank said that trading in the vicinity of their 10-year trough P/E multiple at 10.6x, the shares provide "sufficiently more upside, than downside ahead of the event", hence the upgrade.
RBC lifted its price target on the stock to 395.0p from 330.0p and said it was in line with Visible Alpha consensus for FY24 operating profit, net flows and dividend per share, with its optimism based on a potential refocusing of the company's growth strategy.
Analysts at Berenberg hiked their target price on RHI Magnesita from 4,150.0p to 4,400.0p on Wednesday, noting that the group's recent acquisition of Resco had provided it with better US access.
Berenberg thinks that the near-term restructuring from the acquisition will have an impact on its forecasts. However, it also expects upside from this decision over time, as footprint efficiencies and supply chain streamlining come through, helped by Resco's US focus serving to improve RHI Magnesita's US manufacturing base.
The German bank updated its forecasts to include the acquisition of Resco in 2025, resulting in a 4-6% upgrade to its 2025 and 2026 forecasts.
Berenberg also acknowledged that the outlook was changeable and expect that the group's guidance at its FY24 results in a few weeks will likely "keep a lid on expectations" for the moment but it also noted that it includes little in the way of medium-term synergies in its forecasts, so said upside risk remains over time.
"RHI Magnesita trades on 7.5x 2025 P/E. Our new 4,400.0p target price reflects our 10x 2025 P/E for this stock and we maintain our 'buy' rating," said Berenberg.
JPMorgan has raised its target price for precious metals miner Fresnillo from 900.0p to 1,000.0p and named the stock its top pick among the EMEA-listed gold mining sector.
The bank, which holds an 'overweight' stance on the EMEA gold mining sector as a whole, said Fresnillo was its preference, given it was currently trading on a 3.5x enterprise value-to-EBITDA ratio at a 12% free cash flow yield.
"We expect management guidance on opex inflation at FY24 results (4 March) to further de-risk 2025/26E earnings forecasts," JPM said.
The bank said it was reiterating its positive view on the sector, with shares having traded sideways since the start of November despite a 4% increase in the gold price.
Inflationary pressures, tariff uncertainty and geopolitical tensions should provide upside to prices over 2025, with gold expected to hit the year-end target of $2,950/oz sooner if tariffs risks are prolonged, up from new record of $2,869.68/oz on Wednesday morning.
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