Broker tips: Anglo American, DiscoverIE, B&M

(Sharecast News) - Analysts at Berenberg hiked their target price on mining giant Anglo American from 4,000p to 4,200p on Friday as it said the market was overlooking the consensus upside from its planned merger with Teck. Berenberg said it continues to believe investors were underestimating the underlying earnings potential of the combined Anglo-Teck business, with Chinese competition approvals now the final major hurdle before completion - which was expected to close between September 2026 and March 2027.

Once merged and following the disposal of non‑core assets, Berenberg said the new entity, to be known as Anglo Teck, will be dominated by copper, which was expected to account for roughly 74% of EBITDA. Iron ore and zinc will contribute roughly 15% and 8%, respectively, with the remainder coming from manganese.

Berenberg said the enlarged group would be a roughly 1.3mtpa copper producer, a profile it believes could command a premium multiple in the UK market.

The German bank argued that consensus forecasts did not yet reflect the economics of the combined business, stating a review of Visible Alpha estimates for both companies suggested the sell‑side was largely modelling them separately, whereas Berenberg's integrated model put its 2027-29 EBITDA forecasts approximately 6% ahead of consensus. Using consensus commodity prices, the broker said it would be 12% ahead on EBITDA over the same period.

Berenberg, which reiterated its 'buy' rating on the stock, added that once the deal completes and Anglo Teck holds a capital markets day, the market will likely recognise the embedded upside. .

"We make no changes to our model. We lift our price target to 4,200p per share (from 4,000p per share) as we roll forward our EBITDA and apply a 1.4x NAV multiple (from 1x) to reflect the premium NAV valuations seen in the sector currently. The shares are trading on 1.91x NAV and 7.6x 2027E EBITDA (based on a merged business), which we think is too cheap given premium peer valuations, and think that the shares can comfortably trade at 9-10x EBITDA," said Berenberg.

RBC Capital Markets downgraded DiscoverIE on Friday to 'sector perform' from 'outperform' as it said the stock's valuation was now back in line with history.

The Canadian bank, which kept its 800p target price on the stock, said DiscoverIE delivered solidly for 2026 against a relatively challenged backdrop.

"Growth is now improving and we forecast +18% EBITA growth in 2027E, though about half of this is acquired such that earnings per share growth is forecast at a less aggressive +8%," it said. "However, the share price has now moved to reflect better growth, up circa 50% since end March."

RBC said it upgraded the stock in April 2025 as it was caught up in the tariff selloff and its price-to-earnings fell to a 30% discount to the 10-year average of 18x.

"With the share recently rallying +50% from its end March 2026 lows, the P/E is now at 18.1x, in line with its 10-year average and also at a slight premium to our UK coverage average of 16.9x," it said, hence the downgrade.

Canaccord Genuity has reiterated its 'buy' rating for B&M European Value Retail, saying it was encouraging by this week's annual results which showed the discount retailer's turnaround plan was "gaining traction".

"FY26 was a challenging year for B&M with flat UK LFLs, and margin pressure from price investment and cost inflation, resulting in a sharp decline in profitability despite continued space-led topline growth," Canaccord Genuity said in a research note on Friday.

While group revenues were up 3.6% at £5.78bn over the year to 28 March, annual pre-tax profits were down 38% at £284m, partly due to increases to the minimum wage, higher employer National Insurance contributions and the recycling levy alongside growth in the retail estate.

However, the broker pointed out that the business finished the year "on a firmer footing, supported by the early benefits from the 'Back to B&M Basics' strategy".

"The execution of the Back to B&M Basics plan is on track with strategic progress being made across pricing, promotions, ranging and availability. The group has sharpened price competitiveness, simplified ranges through SKU reductions and improved on-shelf availability (rising from 86% to 93%), while clearing legacy inventory and refocusing the offer," it said.

The stock currently trades at a price-to-earnings ratio of 9.1 based on 2027 calendar year estimates, which Canaccord Genuity said "offers good value", given its long-term average PER multiple is around 15x.