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(Sharecast News) - RS Group received an upgrade from 'hold' to 'buy' at Berenberg on Thursday, with the broker lifting its price target to 900p from 650p as it argued that lagged PMI strength was now turning the earnings cycle in the distributor's favour.
Berenberg said RS, as a late‑cycle MRO supplier, should benefit from industrial PMIs that have remained in expansionary territory through 2026, with the broker expecting the company's H1 results on 5 November to deliver the first revenue‑led guidance upgrade in almost five years.
The German bank lifted its FY27 like‑for‑like revenue growth forecast from 3.2% to 4.5%, driving a roughly 5% upgrade to earnings per share, and said earnings were now well supported by trough margins and significant cost savings already embedded in the business.
While geopolitical risks and higher rates raise questions over the durability of short‑cycle industrial output, Berenberg argued that RS's late‑cycle, largely non‑discretionary MRO demand and pricing power should underpin near‑term outperformance.
Berenberg also highlighted the sizeable operating margin opportunity on RS's restructured platform, noting conversion margins of 21% versus a 31% peer average and management's medium‑term ambition for mid‑teens EBIT margins, which it said implies material upside to outer‑year forecasts.
Jefferies downgraded DFS Furniture on Thursday to 'hold' from 'buy' and cut its price target on the stock to 156p from 210p saying it was "awaiting the inflection".
The bank said strong execution helped DFS to deliver another year of material profit recovery in FY26, despite an increasingly difficult market backdrop.
"However, with order intake remaining negative and consensus already assuming an inflection, we think the risk/reward profile has shifted lower," it said.
Jefferies added that the valuation was less compelling once adjusted for cash rent.
Analysts at Canaccord Genuity cut their target price on Fresnillo from 2,900p to 2,700p and kept their 'hold' rating on the stock after third quarter production missed forecasts, leading the broker to trim its valuation multiples.
Canaccord Genuity said silver output came in 7% below its estimates and consensus, with lower grades across several underground mines weighing on results, while gold production was broadly in line with expectations.
Guidance for 2026-28 was unchanged, though Canaccord nudged its 2026 production forecast 2% lower and highlighted ongoing operational constraints linked to ground conditions and equipment availability.
The Canadian bank said it continues to see downside risk to 2027 consensus underlying earnings and free‑cash‑flow forecasts, citing a lower price deck, higher cost assumptions and persistent inflation in consumables, though it noted a weaker peso offered some offset.
Canaccord highlighted that dividends could be a relative bright spot, with its payout forecasts sitting above consensus and implying an average yield of around 6% over 2026-28.
While rolling forward its net asset value and updating commodity assumptions lifted medium‑term earnings estimates, Canaccord reduced its NAV and EBITDA multiples to reflect current trading levels, leaving it on the sidelines despite what it sees as long‑term margin‑expansion potential.
