Broker tips: Pinewood Tecchnologies, NatWest, SSP Group

(Sharecast News) - Analysts at Berenberg reinstated coverage on software-as-a-service outfit Pinewood Technologies with a 'buy' rating and a 725p target price on Tuesday, stating the stock's current price "significantly underpriced growth". Berenberg noted that Pinewood Technologies shares were down by 33% on 16 February, following the disclosure by Apax Partners that it did not intend to make an offer for Pinewood.

However, in Berenberg's view, Pinewood remains one of the "most exciting growth stories in the UK market", with a leading product offering, a "highly attractive" financial profile and "significant" growth potential.

The German bank also thinks that Pinewood should be resilient to AI-based disruption, given the mission-critical nature and broad-based functionality of its solution, alongside its deep domain expertise and "the proactive approach" that it has taken to AI.

"Pinewood now trades on just 11.4x FY26 EV/EBITDA, compared to the 56% EBITDA CAGR implied by the mid-points of its FY25 and FY28 guidance," added Berenberg.

Shore Capital has raised its share price estimate for NatWest after a "strong set of FY results" from the bank, but kept a neutral stance on the stock, raising questions about whether the firm can maintain high-teens returns over the long term.

The broker lifted its fair value prediction for the stock from 550p to 600p, but maintained a 'hold' recommendation.

Annual results from the company on Friday showed a 24% jump in pre-tax profit to £7.7bn, which was ahead of consensus forecasts by 3%, with net interest income ahead of expectations.

While the £750m share buyback announced was smaller than the £1bn investors had hoped for, return on tangible equity rose to 19.2% from 17.5%, marking the third straight year of high-teens returns.

"Updated guidance indicates this momentum should continue in the near term, with management targeting >17% in FY26F and >18% by FY28F, supported by the proposed acquisition of Evelyn Partners. However, the merits of the Evelyn deal remain uncertain given the significant reliance on both revenue and cost synergies for the transaction to be financially accretive," Shore Capital said.

"We incorporate management's guidance into our refreshed forecasts but retain concerns around the durability of high‑teens returns, which could attract greater competitive pressure and/or additional taxation over time."

SSP Group surged on Tuesday after UBS upgraded the shares to 'buy' from 'neutral', saying it expects the company's focus on cash flow generation to alleviate investor concerns.

The Swiss bank said the risk/reward was looking "increasingly skewed to the upside" for the Upper Crust and Caffe Ritazza owner as it pointed to an estimated free cashflow yield of 7.5% in FY26 and three-year earnings per share compound annual growth rate of 14%.

UBS said potential catalysts for the stock include share buybacks and potential value crystallisation from Indian operations.