Broker tips: Dowlais, Metro Bank, JD Sports, Entain, Wilmington
By Iain Gilbert
Date: Tuesday 19 Aug 2025
(Sharecast News) - RBC Capital Markets downgraded Dowlais on Tuesday to 'sector perform' from 'outperform' as the American Axle deal gets closer and was now in the price.
"With Dowlais trading at only a circa 1-2% discount to the implied American Axle bid price we downgrade our rating to sector perform and set our price target at 77p in line with the current implied bid price," said the bank, which previously had a price target of 70p on the stock.
"We remain of the view that the American Axle offer potentially undervalues Dowlais," RBC said, adding that there is a significant future upside opportunity skewed towards American Axle shareholders.
"However, with the offer having been in place now for over six months with a Q4 completion still expected by the management teams, we see a completion as most likely."
RBC Capital Markets also upgraded Metro Bank to 'outperform' from 'sector perform' on Tuesday and reiterated its 155p price target on the stock.
"We introduce our FY28 estimates, when we expect the bank will deliver a progressive and attractive return on tangible equity (18.2%), despite being conservative in our assumptions relative to management guidance," it said.
RBC's estimates now include that Metro will start to pay a small dividend from FY27, which it said was "an important sentimental development".
The Canadian bank noted that on a two-year-forward P/TBV basis, Metro is trading at 0.65x, a 0.34x discount versus UK peers, despite RBC's expectation that it will deliver a reported ROTE of about 16.1/18.5% in FY27/28E, respectively, versus UK peers' average of circa 140%.
JD Sports surged on Tuesday after Deutsche Bank upped its price target on the stock to 100p from 85p.
"We have thought long and hard about the risk/reward on JD Sports and what would move us from our long held bearish view," the bank said.
"Atop the earnings decline, negative sentiment has driven a material de-rating in the shares, and kept them there. An end to downgrade cycle, line of sight to a Nike comeback and rebuild of confidence in management are all prerequisites, in our view, to supporting an ability to re-rate."
DB, which has a 'hold' rating on the stock, said that while progress was beginning to be made, this doesn't necessarily translate into earnings upside. It also said it sees two elements warranting more in-depth consideration.
"Firstly, what a Nike comeback looks like in reality for JD Sports as Nike moves to increasingly segment and differentiate wholesale channels whilst bringing new partners on board," said DB.
"Secondly, where the balance of risks sits on exposure to US consumer price elasticity; our concern is that it is weighted towards the retailer."
Analysts at Berenberg raised their target price on bookmaker Entain from 1,100p to 1,200p on Tuesday, stating the group's valuation remained "attractive".
Berenberg said Entain had delivered solid first-half results on 12 August, although it noted the group's share price has remained weak due to UK taxation noise, which it thinks is "overdone".
The German bank said Entain's H1 results gave it further confidence in Entain's ongoing growth and had reaffirmed its view that the shares should re-rate as this continues to be delivered.
"The solid results drive upgrades to estimates; however, the shares have been under pressure since the release due, we think, to heightened concerns over taxation in the UK. A report by a think tank, backed by ex-chancellor Gordon Brown, has called for higher taxes on gambling - online casino to 50% (from 21%); machine gaming duty to 50% (from 20%); and betting duty to 25% (from 15%) excluding racing - which led to a wider sector sell-off," said Berenberg.
"The impact of tax increases to this level would cull most industry profits and likely lead to a significant shift to the black market. We see this as unlikely. In reality, a more proportionate increase to c25% across the board, for example, could see a c10% impact pre-mitigation to group EBITDA, but evidently that would be a lower impact to group EBITDA including BetMGM."
Berenberg values Entain using a sum of the parts model, which yields a value per share of 1,200p comprised of 785p for the ex-US business and 415p for the US business.
Canaccord Genuity has reiterated its positive stance on Wilmington following the company's recent acquisition of a Spanish regtech company, saying it sees around 35% upside from the stock's current level.
The Canadian bank kept for the information, data, training and education solutions company.
Wilmington announced on 12 August that it was paying £105m to take over Conversia, a Spanish firm focused on the highly regulated data privacy sector. According to Canaccord Genuity, which reiterated its 'buy' rating and 450p target price, the acquisition has "multiple attractions", including the potential to expand Wilmington's total addressable market (TAM) and recurring revenue share within the core area of governance, risk and compliance (GRC) training. Meanwhile, with the Spanish firm said to be growing at a double-digit rating at a time of expanding margins, the financials to Wilmington look "favourable", the broker said.
"Conversia looks like an attractive asset, well-aligned with Wilmington's 'must-have' GRC training services, as well as the emerging RegTech platform, adding a market leading software and services portfolio with high retention rates (>90%) and recurring revenues (~72%) to the group," Canaccord said. "With completion subject to Foreign Direct Investment clearance in Spain (estimated in Wilmington's 2Q26), we leave our forecasts unchanged, but expect Conversia to be earnings-enhancing in the first full year of ownership."
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