Broker tips: Trustpilot, IAG, 4imprint
By Iain Gilbert
Date: Wednesday 12 Mar 2025
(Sharecast News) - Trustpilot rallied on Wednesday as JPMorgan Cazenove placed the shares on "positive catalyst watch" into results and said that underperformance year-to-date presents a buying opportunity.
JPM noted that the shares were down 12% YTD, versus its wider European Software coverage up 7%, the Stoxx Europe 600 up 5% and the FTSE 250 down 4%.
It also pointed out that Trustpilot has recently printed well above expectations growth in the US - a key growth market, which has been a strategic area of focus for management - which it expects to be a focus for the upcoming FY24 results, scheduled for 18 March.
"Through mid-2024, Trustpilot's shares temporarily underperformed, which we argued at the time was a buying opportunity, when shares were at 225p; amidst current market volatility, we see the current juncture of underperformance as a similarly attractive entry-point for a business that is growing at mid-teens while expanding margins at pace and returning capital to shareholders," JPM said. "We leave our above-consensus estimates unchanged and with a lowered bar now heading into the results, we place the shares onto positive catalyst watch into the FY24 results, seeing outperformance being driven by earnings and free cash upside, positive US growth momentum, potential for further capital returns and share price mean reversion versus peers."
JPMorgan rates the shares at 'overweight' with a 350p price target.
Barclays has downgraded Europe's flag carriers, including the owner of British Airways, on the back of potential weakness in the US market.
In a note on European airlines published on Wednesday, the bank cut its rating on British Airways-owner International Airlines Group to 'underweight' from 'overweight', stating it was a "simple macro call".
"European flag carriers are highly reliant on North Atlantic profitability. While they do not disclose regional profitability we estimate that well over half of their EBIT derives from the North Atlantic," said Barclays. "We think that the revenue weakness flagged by the US full-service airlines in profit warnings may spread from the domestic market to the international markets. We also see macro threats to North Atlantic demand."
A number of US airlines cut their estimates this week, including Delta Air Lines and American Airlines, on the back of mounting economic uncertainty. Barclays argued that the North Atlantic remained a "good market" and said the major European and US airlines would likely continue to make profits from it this year.
However, it now think they will be less profitable than it thought they would be two weeks ago and expects demand to weaken on each side of the Atlantic and hence unit revenues to weaken.
"We recognise this call may be early. We hear only confidence about the Atlantic from the airlines to date,: said Barclays. "However, we still think a weakening trading environment on the North Atlantic will likely soon emerge."
Analysts at Berenberg slashed their target price on promotional merchandise outfit 4imprint from 7,365.0p to 6,775.0p on Wednesday following the group's FY24 results.
Berenberg noted that thanks to 4imprint's strong cash position, its board recommended a $70.0m special dividend, which will bring FY25 cash returns to $138.0m on its estimates.
However, due to a cautious outlook statement, Berenberg conservatively reduced its target price and FY25 earnings per share forecasts by 9%.
"We remain confident in the long-term equity story and note that periods of macro uncertainty have historically provided excellent buying opportunities in 4imprint's shares," said the German bank, which reiterated its 'buy' rating on the stock.
Berenberg added that 4imprint's shares trade on a FY25 price-to-earnings ratio of 16.1x and a free cash flow yield of 6.1% - versus 10-year historical averages of 21.0x and 4%, respectively - as investors price in the impact of newly announced tariffs on the business.
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