Broker tips: Tesco, Boku, NatWest
By Iain Gilbert
Date: Monday 01 Sep 2025
(Sharecast News) - JPMorgan Cazenove placed Tesco on 'positive catalyst watch' on Monday ahead of first-half results next month, as it lifted its price target on the stock to 450p from 400p and reiterated its 'overweight' rating.
"We have been pretty consistent with our thesis, based on three premises: (i) Rational backdrop, (ii) substantial capital returns, and (iii) an appealing set-up on the stock (earnings & valuation upside risk)," the JPM said. "We view these arguments as ongoing and reflect the solid momentum in our near- to medium-term expectations."
JPM upgraded first-half estimates by 17%, FY26 by 7% and FY27 onwards by an average 4%, sitting "comfortably" above guidance and now sitting roughly 10% above the midpoint of company guidance for group adjusted operating profit.
"In our view, the company is unlikely to raise guidance with the 1H26 print in order to retain flexibility to address potential heightened competition (though all signs so far confirm an unchanged status quo within Asda and discounters)," said the analysts. "However, we do believe the company may narrow the guidance range with this update towards the upper-end, triggering consensus upgrades."
Analysts at Berenberg raised their target price on mobile payments company Boku from 280p to 300p on Monday as it said the firm was a "high-quality and differentiated offering" in the "increasingly commoditised" payment-processing industry.
Berenberg, which has a 'buy' rating on the stock, noted that Boku has two distinct businesses - its established, lower-growth direct carrier billing business, which makes up roughly 65% of total revenues and has the dominant share of a stable market, and its digital wallet and account-to-account offerings, which were more nascent, higher-growth and operate in large, but increasingly competitive, markets.
The German bank said that with Boku's equity story primarily centred around its digital wallet and A2A offerings, it had chosen to assess the company's ability to compete with significantly larger competitors, concluding that Boku has a "sufficiently differentiated offering" to do so, through its core focus on LPMs, highly customised offering and advanced cross-border capabilities.
"In our view, Boku distinguishes itself from its peers by offering a more tailored, higher-quality offering, with respect to both its technology and its customer service levels. The company is disproportionately focused on the largest global merchants, while peers typically have a more 'mass-market' focus. This has helped drive high-quality, highly customised technology that maximises the conversion rates for its merchant customers. The quality of Boku's technical proposition is reinforced by its high-touch customer service, through which it optimises payment processes, acts as a trusted advisor and monitors potential issues - ultimately providing a flexible and reliable service that its merchant customers are willing to pay a premium for," said Berenberg.
The analysts expect Boku to achieve a FY24-27 revenue compound annual growth rate of roughly 23% and a 150-200 basis point annual increase in its adjusted underlying earnings margin from FY26. Within this context, Berenberg reckons a 4.8x FY26 enterprise value to sales ratio and a 28.5x FY26 enterprise value/reported underlying earnings ratio represent "highly attractive" value.
Deutsche Bank said on Monday that its potential long-term positive view on banks remains after the sector took a hit on Friday, as the Institute for Public Policy Research suggested a potential windfall tax.
"We expect the threat of taxes will continue to weigh on UK bank shares into the Autumn budget," said Deutsche Bank. "Typically, the news is worse than the reality and shares tend to recover quickly as policies are clarified and our long-term positive view on UK banks remains."
DB said the suggestion of an 'excess reserve' levy on Friday could have up to 20% earnings impact, which is a substantial overhang. However, it also noted that this was the harshest of scenarios and that this type of levy was highly problematic and unlikely, in its view.
"A levy could raise up to £5bn per year," it said. "We estimate this has a 10% earnings impact on the UK banks, with NatWest most affected." But also noted that there were many complications with this.
"Firstly, quantifying the reserve base at bank level is impossible. Secondly, tying a tax to liquidity would encourage banks to repay liquidity facilities and could quickly contract monetary supply, said DB. "Thirdly, a large part of the banking system is building societies which operate with very low margins and would be disproportionately impacted.
Lastly, DB also noted that there was a "high" risk that it interferes with monetary transmission.
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