Broker tips: Boku, Weir, Currys

(Sharecast News) - Analysts at Canaccord Genuity initiated coverage on mobile payments firm Boku with a 'buy' rating and 271.0p target price on Monday, stating the group was "owning the rails in a wallet-first world". Canaccord Genuity said Boku has achieved "the rarest of occurrences", having out-executed larger competitors and out-positioned incumbent card processors in the global pivot to local payment methods.

By 2028, roughly 60% of cross-border e-commerce was expected to transact via LPMs such as e-wallets and real-time payments, with Boku sitting "at the heart of this shift", offering global merchants such as Amazon and Google access to an increasingly fragmented patchwork of domestic payment schemes.

"Revenue momentum is building with other LPM revenue increasing from $1.6m in H122 to $14.1m in H124. Management has guided to 20%+ compound revenue growth over the medium term," said Canaccord Genuity, which added that Boku was "a direct beneficiary of the structural shift in global payments" from cash and cards towards mobile-centric, digital payments.

The Canadian bank said "Boku's big idea" was to leverage a decade of integration and commercial relationships from direct carrier billing and redeploy to other LPMs, noting that it has now built a global platform of more than 250 LPMs and over 100 merchants, underpinned by infrastructure and regulatory scale across 74 markets.

"Boku has strong structural drivers, a defensible moat, impressive profitability (FY24: 31.6% adj EBITDA margin), and appears primed to benefit from operating leverage as volumes scale," added Canaccord.

Citi upgraded Weir Group on Monday to 'buy' from 'neutral' and lifted the price target to 2,900p from 2,130p as it highlighted two core elements to its 'buy' case.

Firstly, Citi said exposure to the mining end-market offers the opportunity for idiosyncratic earnings growth over and above a soft macro environment.

"Our proprietary mining survey suggests that mining capex intentions remain positive, while we expect mining production to remain resilient, both helped by favourable commodity prices (particularly copper and gold)," the bank said.

Secondly, Citi said Weir looks structurally undervalued for a company of its quality and that its multiple "has yet to truly reflect its self-help journey".

Citi said: "Our work inside on benchmarking and valuation indicates potential for circa 15% re-rating potential at Weir given its return on capital employed and free cash flow margin profile; robust relative growth can be a catalyst."

Currys slumped on Monday after RBC Capital Markets downgraded shares of the electricals retailer to 'sector perform' from 'outperform', saying it was time to take profits after a strong run.

The Canadian bank, which maintained its 140.0p price target, said Currys has worked hard to improve its offer in both the UK and Nordics, and its stronger balance sheet and likely lower pension contributions should enable it to make higher cash returns going forward.

"But macro risk remains and we think its valuation is fairer now, hence we reduce our rating to sector perform, and remove our speculative risk qualifier," said RBC.

RBC noted that Currys saw three rounds of earnings upgrades in FY25 but said these have stalled somewhat recently as the outlook for the Nordics has become more uncertain.

RBC, which highlighted a "mixed" macro picture, said Currys has a strong relative market position, some further self-help opportunities and is building what it calls more 'stabilisers' into the business, to reduce its macro and seasonal risk. This includes adding new products and more recurring revenues.

"However, the discretionary nature of its assortment and its relatively low operating margins mean that its earnings outlook will remain sensitive to the macro," RBC said.

In the UK, it continues to expect real wage growth to be positive but for this to fade over the next year, and said the outlook for the Nordics was mixed. At current rates, it expects the Nordics to provide a small FX tailwind compared to a headwind last year.