Broker tips: 3i Group, Rotork, Next Fifteen

(Sharecast News) - Citi lifted its price target on 3i Group on Tuesday to 4,850 from 4,670p, mainly due to FX, and reiterated its 'buy' rating following the filing of Dutch retailer Action's 2024 annual report. "New disclosure suggests meaningful revenue upside from Germany," Citi said. "It also shows Action's best-in-class working capital dynamics improved in 2024."

Citi said it finds evidence of downtrading among more affluent customers, while new data shows store sizes are largely unchanged. 3i Group holds a majority stake in Action.

RBC Capital Markets upgraded Rotork on Tuesday to 'outperform' from 'sector perform' as it pointed to the fact the valuation is at the low end of its 10-year range.

The bank noted that Rotork shares have fallen in line with its sector over the last three months, but said it sees its business mix as more resilient, both in terms of end markets in general and specific tariff risks.

"Absolute EV/EBITA and price-to-earnings are both close to 25% discounts to their 10-year average and both absolute and relative valuations are at or below the low ends of their 10-year ranges," said RBC, which kept its price target at 370p.

It said that Rotork's direct tariff risk is limited, given a local-for-local business model for both assembly and its supply base.

"The company also has had a good track record of passing prices through to customers, including during the first Trump administration and post-Covid," it said.

Analysts at Berenberg lowered their target price on advertising firm Next Fifteen from 790.0p to 660.0p on Tuesday, citing a "cautious outlook".

Berenberg said Next Fifteen's FY25 results showed that group net revenue was down 1% year-on-year at £569.7m, while adjusted underlying earnings came to £107.5m, both of which were in line with consensus. Adjusted EPS was 69.3p, 3% below consensus.

The German bank also stated that Next Fifteen's balance sheet remained "robust", with net debt of £38.4m, and pointed out that the shares were trading on a FY26 price-to-earnings ratio of 5x.

In terms of the outlook, Next Fifteen's management noted that the group's current performance was broadly in line with internal expectations.

However, Berenberg adjusted its FY26 forecasts for Next Fifteen by reducing net revenue forecasts by 2%, adjusted underlying earnings by 6%, and adjusted EPS by 9%.