Broker tips: Dr Martens, BP, DCC
By Michele Maatouk
Date: Monday 19 May 2025
(Sharecast News) - RBC Capital Markets cut its price target on Dr Martens on Monday to 60p form 70p and reduced its revenue and earnings per share estimates, saying that consensus estimates may be too optimistic.
The bank, which rates the shares at 'sector perform', said it expects Dr Martens to deliver FY25 results largely in line with consensus and guidance, which has been a year of reducing inventories and debt, preserving cash and stabilising the business overall.
"Looking ahead, we anticipate a return to positive revenue growth (+5%) and incremental margin rebuild to 10% in FY26E, however our earnings per share estimates are circa 20% below consensus," it said.
RBC said that given its relatively small size, the longer-term growth prospects for DOCS should remain healthy. This is supported by store roll-out, franchisee conversions, and increasing direct-to-consumer mix, as well as improving the quality and depth of wholesale distribution.
"However, FY26E consensus expectations appear too elevated and risk/reward appears balanced to us at this stage," it said.
Jefferies downgraded BP to 'hold' from 'buy' and slashed the price target to 390p from 550p.
"As we lower our oil price outlook for 25/'26, we see BP's strategy facing increasing execution risk: the company may soon have to face the hard choice between delivering on the leverage reduction target or suspending the buyback and/or, reducing its upstream growth ambitions," the bank said.
Jefferies said its large-cap order of preference is Shell, then TotalEnergies, then BP.
The bank pointed out that BP has the highest leverage in the sector. In February, BP presented a "credible" plan to reduce net debt by $5-9bn and hybrid debts by around $4bn by 2027, Jefferies said.
"However, in the current macro conditions, we see this plan as increasingly at risk: at $65/bbl oil prices, bp will generate circa $8bn lower CFFO compared to its '25-27 plan," it said. "This leaves de-gearing almost entirely driven by the execution of the $20bn divestment plan, which we see as facing greater risks due to global economic uncertainty."
It noted that year to date, BP has underperformed its European peers by around 5%.
"However, NTM (next twelve months) earnings estimates have fallen by 9pcp more than for the sector (12%), resulting in a relative price-to-earnings re-rating: currently at 14x versus the sector at 11x (FY25)."
RBC Capital Markets cut its price target on DCC to 5,200p from 5,400p as it tweaked forecasts to reflect a lower valuation for DCC Technology, given weaker trading and macro uncertainty.
"Hence we see less upside than previous, but given a lack of value elsewhere at the defensive end of the sector, we remain at outperform, ahead of the cash return," the bank said. "However, this is certainly not a table thumper."
RBC said its adjusted EBITA forecasts move down around 1%, bearing in mind that it had already brought its DCC Technology forecasts down ahead of numbers to reflect tough trading and tariff uncertainty.
The bank said its earnings per share changes are immaterial but will be sensitive to the exact timing and price of the £100m buyback and £600m cash return. It assumes completion by mid financial year at the current share price.
RBC said the key sensitivity remains the value the market ascribes to DCC Energy.
"Greater disclosure is helpful, but there is a risk that the market continues to struggle to value it as DCC Energy is somewhat of a conglomerate and a unique proposition in itself," it said.
"Hence, there is a risk that a full break-up may be the only way to demonstrate value over the medium-term, in our view."
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN