Broker tips: British Land, Entain, Persimmon, On the Beach

(Sharecast News) - Panmure Liberum upgraded British Land on Tuesday to 'buy' from 'hold' and lifted its price target to 490p from 424p, citing rent reversion upside. "After the latest sharp upgrade to portfolio reversion at the 1H26 results, and subsequent integration into our MTSE [Medium Term Sustainable Earnings] framework we upgrade our measure of sustainable earnings 10.6% to 32.3p per share, and our periodic adjusted EPS forecasts by an average of 6.2%," Panmure said.

The target price increase and rating upgrade come off the back of this earnings upgrade, it said. Panmure noted that total reversion was up 1.4x in the two years since 1H24 from £65m to £156m, largely driven by the office portfolio but also the Retail and Urban Logistics book.

"While we remain cautious of promises of growth tomorrow, the reversion and market rent progression is 1) in line with our own positive view on best quality London offices and retail parks / shopping centres, 2) our MTSE framework doesn't speculate on future ERV growth, but does factor in reversion potential that's in place and 3) we take 75% of the potential reversionary upside in our MTSE figures for our desired margin of safety," it said. "Finally, 4) BLND say the reversion potential and vacancy is concentrated in new and refurbished space such as Norton Folgate and Regents Place."

At the current share price, Panmure said the shares were attractive, and stated there was a floor to the share price emerging of about 400p, below which it would be "happy buyers and excluding bond market machinations see a return to the lows of 2025 as unlikely"

JPMorgan upgraded Ladbrokes owner Entain on Tuesday to 'overweight' from 'neutral' as it said market share momentum appears to be more resilient than initially anticipated, with a solid third-quarter performance delivered despite the lapping of some of these easy comps.

This implies a sequentially improving underlying momentum, the bank said. In the UK specifically, Q3 online net gaming revenue growth was 15% after 21% growth in the first half, despite comps somewhat normalising quarter-on-quarter, it said, "demonstrating a supportive momentum overall".

The bank also said that the new strategy at BetMGM was bearing fruit, stating that it expects BetMGM to hit its $500m EBITDA target by FY 27. Starting this year, BetMGM will be distributing most of its EBITDA - net of a £50m annual capex - to both parents, which should essentially help bolster Entain's own cash, it said.

JPM, which cut its price target on the firm to 1,090p from 1,150p, also highlighted Entain's "relatively well diversified portfolio", which it said adds an element of defensiveness versus some of its peers. The bank also said the stock's valuation looks appealing, with Entain still trading at the low end of the peer group range.

"Shares have been under pressure on the back of the UK Budget and prediction markets," it noted. "With the UK, its biggest geography, now de-risked (the UK Budget related gaming tax increase triggering HSD-LDD percentage cuts to Entain's group EBITDA post mitigation, now incorporated in our estimates), valuation remains appealing, with the shares trading on 6.3x 1-year forward EBITDA (ex BetMGM)."

Analysts at RBC Capital Markets took a fresh look at UK housebuilders on Tuesday, changing the ratings and target prices on some of the sector's biggest names.

RBC Capital Markets stated the UK housing market was "far from broken", pointing out that the current level of mortgage approvals was back to the levels seen from April 2015 to Covid-19 and that housing transactions were also close to "normal" market levels.

Turning to house prices, RBC noted that "all the major house price indices" suggest that house prices were stable, and have yet to give up their Covid gains and have recovered from the short-lived impact of the mini-budget in September 2022.

"In our view, the UK housebuilders are hamstrung by a slow moving planning system, slow deployment of infrastructure investment, and the slow allocation of the affordable housing program. Therefore, volumes are lower than they could be, which brings operational gearing headwinds, and if we add in the fact that build cost inflation is outpacing house price inflation, returns are being hit hard," said RBC Capital.

On the company level, RBC Capital upgraded Persimmon from 'sector perform' to 'outperform' and hiked its price target on the stock from 1,375p to 1,750p, stating the firm was "leading the field" when it comes to site openings, that it was working hard to drive demand through a combination of innovative mortgage products, had a growing build to rent/partnerships operation, and that it was ahead of the pack on vertical integration.

"Persimmon's increasing exposure to build to rent and partnership plays into the themes of a Stratified Society highlighted in RBC's Imagine The Great Recalibration which explores the disruptive forces reshaping industries, economies and societies," said RBC. "We are not sure if there is a three-line whip for all of Persimmon's employees to eat three shredded wheat, but we wouldn't be surprised if there was. On a one-year view we believe that Persimmon's can do attitude will lead it to outperform the sector."

On the Beach's stock surged on Tuesday morning after the online package holiday impressed with its third straight year of record results, though they weren't enough to deter Shore Capital from keeping a 'hold' rating on the stock.

OTB reported that total transaction value was up 11% at an all-time high of £1.23bn, with revenues rising 6% to £121.4m and repeat customer bookings and app monthly actives users up 18% and 58%, respectively.

"Whilst valuation, EV/EBITDA