Broker tips: Entain, St James's Place
By Michele Maatouk
Date: Tuesday 13 May 2025
(Sharecast News) - UBS upgraded Entain on Tuesday to 'buy' from 'neutral' and lifted the price target to 920p from 820p.
It said the Ladbrokes owner has been steadily progressing on its key operational frontiers over the past year, yet the shares have underperformed, declining 8% in a rising sector.
"In short, the company is yet to be rewarded for its underlying improvements through 2024," UBS said.
"We see 2025-26 as a catalytic 'come back' period as Entain continues to deliver in its online business, proves out sustainable profitability in BetMGM and inflects to free cash flow profitability."
The bank said Entain is the cheapest amid peers and offers the highest level of earnings growth relative to its multiple.
"The group trades on a circa 9% FY26 free cash flow yield, a 20% discount to peers and offers a +20% compound annual growth rate out to 2029E on FCF/share," it said. "We see catalysts in H1 trading via guidance upgrades for Entain online and BetMGM."
Elsewhere, Berenberg hiked its price target on St James's Place to 1,300p from 850p to reflect the high level of visibility that it has on the company's 2030 targets and its conviction that the group can capitalise on the structural opportunity.
The bank said the price target values SJP on 10x its FY29 estimated earnings per share.
Berenberg said that solid fundamentals are underpinning a recovery.
"St. James's Place (SJP) has recovered its poise, in our view," it said. "Annualised Q125 net inflows of 3.8% marked an acceleration from 3.3% in Q424 and the low of 1.7% a year ago.
"Despite the challenging regulatory and market backdrop, the underlying business has remained fundamentally sound."
It also said that higher-for-longer interest rates could continue to be a hurdle to clients committing to new investment, while a sharper focus on productivity may initially weigh on adviser and client numbers.
"However, management's 2030 target to double the underlying cash result only assumes net inflows of 2-3% per year.
"This is not only underpinned by the structural opportunity, but we think that there is upside to this if investment helps SJP to capture a larger wallet share."
Berenberg maintained its 'buy' rating on the stock.
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