Broker tips: Balfour Beatty, Greggs, AJ Bell

(Sharecast News) - Analysts at Berenberg hiked their target price on construction firm Balfour Beatty from 710p to 760p on Friday, stating the group's "order book strength shines through".

Berenberg said Balfour Beatty's full-year 2025 trading update on 4 December highlighted that it had continued to perform well and that it was on track to achieve full-year earnings expectations.

The German bank noted that Balfour's order book was expected to grow by roughly 20% in FY25, mainly driven by the its UK construction exposure, which it pointed out has seen over £3.5bn of new power generation orders in the year.

Additionally, Bernberg highlighted that average monthly net cash was now expected to be at the top end of previous guidance of £1.1bn-1.2bn, which gives Balfour "plenty of options".

"Overall, this represents a really strong statement from Balfour and sets the business up well as we head into FY26. We update our numbers for various factors - including now assuming a 2026 buyback - resulting in 2- 5% upgrades across the forecast period," said Berenberg, which reiterated its 'buy' rating on the stock.

Berenberg also pointed out that Balfour shares currently trade on a 14.2x FY26 price-to-earnings ratio and 8.1x EBIT.

JPMorgan initiated coverage on bakery chain Greggs with a 2,110p target price and an 'overweight' rating on Friday, statting that a re-rating appeared to be "on the menu".

JPMorgan said its rating was driven by its proprietary benchmarking analysis, which suggested Greggs was "a structural winner"

It also pointed to "a rather asymmetric risk-reward in the investment case", stating that with shares trading on trough multiples and the business approaching trough cycle, its our Bull Case indicated 55% upside potential.

JPM highlighted Greggs' "significant re-rating potential", with catalysts being "more resilient-than-expected" on a like-for-like basis, with earnings delivery from FY26 onwards, coupled with an inflection in free cash flow and capital returns.

AJ Bell shares were under pressure after the trading platform operator disappointed the market with margin guidance for the current year, but that didn't stop Shore Capital from reiterating its 'buy' rating on the shares.

AJ Bell delivered record results for the 12 months ended 30 September, with revenues up 18% and earnings per share up 26%, with the latter representing a 2% beat to consensus estimates. What's more, a further £50m share buyback was announced on top of a progressive dividend policy. However, its outlook statement implied a flat pre-tax profit margin in FY26, held back by a planned £16m investment in distribution and technology costs.

"The major news from FY25 results is an incremental £16m spend to acquire more customers at a reasonable price, causing a moment of market reflux, and downgrades to our and the market's S/T estimates," Shore Capital said, cutting its EPS forecasts for the next two years by 7% and 4% respectively. "It is likely that we and others will underestimate the growth which will flow from such a decision, though we have tried to estimate a marketing ROI in our new numbers."

The broker, which has a 600p target price on the stock, highlighted AJ Bell's 8.1% growth in organic net inflows to the platform in FY25, which is "quite a speed".

"AJ Bell is a winner in an underserved space, with high organic growth creating largely recurring revenues, and it now has the scale to carry on conquering."