Broker tips: St James's Place, Centrica, Tate & Lyle
By Michele Maatouk
Date: Friday 16 May 2025
(Sharecast News) - JPMorgan Cazenove reiterated its 'strong conviction' on overweight-rated St James's Place on Friday and lifted the price target to 1,310p from 1,205p.
"St. James's Place remains a top conviction within our coverage universe," it said.
The bank said it was updating its St. James's Place model, incorporating the reported Q1 assets under management, while also reflecting in its estimates the good market performance of recent weeks.
"As a result, we increase our 2025-27 underlying cash earnings per share estimates by 8-12%, primarily thanks to a circa 6% increase in our funds under management assumptions," it said.
"The higher FUM leads to a 4%-6% increase in net income, which is then amplified at the EPS level by operating margins as we make no changes to our cost estimates," said JPM, which lifted its price target accordingly.
It said that impressive strength in net flows recorded over past 12 months demonstrate to the bank that St. James's Place is well on track to continue to grow and capture market share in the UK wealth management market.
"Whilst the repricing, which will kick in over the summer, will lead to a sequential decline in EPS in 2025 and 2026, this is already reflected in consensus, and we expect that attention will gradually shift to the appealing long-term growth trajectory for the business (JPMe 25% EPS compound annual growth rate over 2026-30), and drive a gradual re-rating in the stock," it said.
Elsewhere, JPMorgan trimmed its price target on British Gas owner Centrica to 170p from 185p but said it remains 'overweight' the shares on upside from capital allocation discipline.
The bank said: "We remain positive on Centrica despite last week's trading update which implied earnings downgrades for 2025.
"In our view, the combination of strong cash flow generation from existing businesses and the potential for value creation from development capex underpin a positive risk/reward.
"While we have reflected a more cautious outlook for trading & residential energy supply, we also now reflect value accretion from Centrica's Meter Asset Programme (MAP) and investment in new build gas plants in Ireland.
"Furthermore, we could see positive news in the coming weeks on investments into new nuclear, as well as an agreement with the government on the future of Rough gas storage."
JPM said it continues to believe that management will maintain capital allocation discipline, underpinning its view that risk/reward is skewed to the upside.
Citi upgraded Tate & Lyle to 'buy' from 'neutral' as it said the risk/reward looks attractive ahead of the capital markets day.
"Tate's valuation seems stuck at levels commonly seen for commoditised players despite its portfolio migration, which in our view appears to be due to the market focusing on potentially misleading elasticity metrics," it said.
"This perception could be addressed at the July CMD should the company demonstrate that 'new Tate' has secured a broader access to the reformulation profit pool, decoupling from end market weakness whilst supporting a 7-9% EBITDA algo post FY26 transition."
It pointed to scope for the valuation gap versus peers to be closed and limited downside risk to FY25 earnings.
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