Broker tips: Morgan Sindall, Breedon, XPS Pensions, Whitbread
By Iain Gilbert
Date: Thursday 19 Jun 2025
(Sharecast News) - Analysts at Berenberg raised their target price on construction firm Morgan Sindall from 4,500.0p to 5,000.0p on Thursday, stating that "strong trading conditions" had continued.
Berenberg noted that since its FY24 results on 26 February, Morgan Sindall has issued three trading updates highlighting the "strong progress" it has made in various parts of its business.
Morgan Sindall's latest update came on 17 June, this time
highlighting that group pre-tax profits were expected to be "significantly ahead" of previous estimates.
The German bank pointed out that Morgan Sindall management had confirmed that year-to-date trading has been "encouraging", driven by ongoing strong trading conditions in its key fit-out division, as well as by improved margins in its construction unit.
"This helped lift the shares to new record highs, although we continue to believe there is more growth to follow in time, given the various options the portfolio structure provides," said Berenberg. We increase our EPS by 11% in FY 2025 and 6% in FY 2026," said Berenberg.
Berenberg added that the stock currently trades at a 13.6x FY25 price-to-earnings ratio and 9.2x EBIT.
RBC Capital Markets cut its price target on Breedon on Thursday to 575p from 625p as it trimmed its estimates.
The Canadian bank pointed to rain and ice in the US, climate change challenges in Ireland and low ready mix volumes in the UK.
RBC highlighted that Breedon has seen the worst weather trends of all the building materials companies under its coverage.
However, it noted that the integration of BMC and Lionmark was on track, and said while its US business was growing, with 31 days of sub-zero temperatures in January and February and the wettest April in 132 years, the weather in Missouri and St Louis has not been kind to construction volumes.
"Temporary challenges may weigh on the share price, but in our mind the medium term investment case has not been derailed, and we would view any share price weakness as a buying opportunity," RBC said, keeping its 'outperform' rating on the stock.
Analysts at Canaccord Genuity raised their target price on financial services business XPS Pensions from 435.0p to 459.0p on Thursday following "another year of impressive double-digit growth" in all key financial metrics in FY25.
XPS reported an 18% year-on-year jump in total revenues to £231.8m, a 27% increase in adjusted underlying earnings to £69.7m and a 22 basis point increase in adjusted EBITDA margins to 30.1%.
Following XPS' Thursday morning earnings, Canaccord Genuity said its forecasts had been tweaked, with a 1% uplift to revenue in FY26 and FY27, also resulting in a similar upgrade to adjusted earnings per share.
"In our opinion, XPS is a very well-managed business with a strong culture, high client retention, and multiple significant revenue opportunities, all of which should continue to support at least mid-single-digit percentage organic revenue growth in the medium term," said the Canadian bank, which reiterated its 'buy' rating on the stock. "The defensive, regulatory-driven characteristics of the revenue model, while delivering operating leverage, remains very much a key attraction, in our view."
Canaccord Genuity noted that when arriving at its target price, it had taken the peer group's one-year forward price-to-earnings ratio of 20.5x and applied it to its CY26 EPS forecast. It also said its new target price implied a 22% upside and a total shareholder return of 26%.
Shore Capital has reiterated a 'buy' rating for Whitbread despite a "continued sluggish backdrop" for the hotel and hospitality business in the UK, highlighting solid trading in Germany and a strong outlook for profits and shareholder returns.
Whitbread shares were lower on Thursday after the company reported challenging conditions in the UK in its first quarter ended 29 May, with revenue per available room down 2% due to a softer performance in London (-2.4%), and food and beverage sales 16% lower than last year.
However, according to Shore Capital, the company's German operations remain the "bright spot" with RevPAR up 12% during the period, and food and beverage sales up 22%.
Shore Capital estimates a 1% fall in RevPAR across the business overall over the full fiscal year, as it noted that Q1 trends were "tracking modestly behind this" in the UK, it was minded to maintain its FY estimates, especially noting the positive momentum in Germany.
After a recent rally in the share price, ShoreCap noted that Whitbread now trades at 14 times full-year earnings and an enterprise value/underlying earnings multiple of eight, excluding leases.
"Management have set out a roadmap to add over £300.0m to the bottom line and return of £1.0bn of cash in the medium term, which on our estimates could increase EPS to comfortably above 300.0p," said ShoreCap. "This opportunity is yet to reflected in the share price, although a return to UK RevPAR growth is the likely key catalyst to a rerating."
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