Broker tips: Filtronic, AstraZeneca, Whitbread, Centrica, Brooks Macdonald

(Sharecast News) - Berenberg initiated coverage on shares of Filtronic on Thursday with a 'buy' rating and 196p price target. Berenberg noted that Filtronic, which designs and manufactures components and subsystems for radio frequency communication networks, has established a strong competitive position in the highly specialised niche in which it operates and said "the proof is in the pudding".

"We view Filtronic as a unique stock offering investors exposure to the booming space industry alongside an accelerating European defence market," the bank said.

"It holds sovereign accreditation and strategic relationships with multiple blue-chip space and defence contractors, including SpaceX and multiple defence primes," it said. "Filtronic's products are critical to the end-goals of these customers and it has undertaken significant recent investment in facilities and personnel, which could lead to more than £200m of potential revenue."

The German bank highlighted "significant" upside potential and pointed out that Filtronic issued nine outlook upgrades in FY24 alone, following the announcements of large contracts.

Berenberg added that the shares have fallen by around 23% in the last three months, presenting an attractive entry point "for this high-growth story".

Deutsche Bank downgraded AstraZeneca to 'sell' from 'hold' on Thursday and cut the price target to 10,500p from 11,500p as it said it was turning sceptical on SERENA-4.

SERENA-4 is a phase 3 comparison of AZD9833 (camizestrant) plus palbociclib, versus anastrozole plus palbociclib, for patients with ER-positive, HER2-negative advanced breast cancer who have not previously received systemic treatment for advanced disease.

DB said that since upgrading AZN to 'hold' during the company's China episode, it has stayed somewhat cautious on a name that has remained a consensual favourite among investors.

"Here, with AZN at the top of its recent (price) trading range, we take the opportunity to turn more explicitly negative: at 17x FY26 PE the stock is admittedly only around the mid-point of its 13-24x decade multiple range," the bank said. "It is, however, beyond the HER2/TROP2 pipeline heydays in our view and much closer to material patent pressures (starting with Farxiga in H126)."

DB said its reduced target price was a result of reduced confidence in AZN's pipeline outlook following its deep dive into the breast cancer space.

Shares in Premier Inn owner Whitbread tanked on Thursday after the company posted a drop in interim profits and lowered guidance for its German operations, though Shore Capital said the disappointing first half is unlikely to change forecasts too much.

The broker kept a 'buy' rating on the stock, saying that the current valuation doesn't reflect the earnings potential of the business.

Whitbread said first-half profit before tax (PBT) fell 7% to £316m, which was slightly below Shore Capital's expectations, reflecting a modest decline in UK revenue per available room (RevPAR), cost inflation and lower interest income, though this was partly offset by additional rooms and lower losses in Germany.

However, the company downgraded its full-year adjusted PBT guidance for Germany to "up to £5m", from previous guidance of between £5m and £10m. It pointed to a softer market performance in the second quarter as there was a lower number of high-impact events this year.

"The outlook statement is confident so we would anticipate RevPAR assumptions getting in nudged up, although we some additional headwinds, we would not expect much change to PBT estimates," said Shore Capital, which has currently pencilled in a full-year pre-tax profit of £464.3m for the year to February 2026, down from £484m last year.

As for the stock's valuation - trading at 16x earnings at an enterprise value-to-underlying earnings ratio of 9x, excluding leases, Shore Cap said the market was "fail[ing] to account for the potential earnings uplift from the Accelerating Growth Plan in the UK", as well as from new rooms and German profit growth, along with the property backing and limited debt levels.

Barclays upgraded British Gas owner Centrica on Thursday as it took a look at European utilities.

The bank lifted Centrica to 'overweight' from 'equalweight' and upped the price target to 210p from 180p, to reflect increased confidence in the company's upside potential.

"This positive view is underpinned by Centrica's effective redeployment of cash into value-accretive investments, particularly in Sizewell C, Meters, and LNG, which has been the primary catalyst for our price target increase," it said.

"Looking ahead, we see further upside that is not yet reflected in our price target, notably from potential additional capital allocation to nuclear (including SMRs) and the Rough gas storage site."

Barclays added that despite recent gains, Centrica remains undervalued relative to peers.

Analysts at RBC Capital Markets lowered their target price on wealth management firm Brooks Macdonald from 1,900p to 1,850p on Thursday following the group's first-quarter trading update.

RBC Capital said it had made "minor reductions" to net flow forecasts for the 2026 trading year, which led to "marginal" earnings per share reductions across its forecast period.

The Canadian bank updated its forecast funds under management and administration estimates, trimming its net flow forecasts for FY26, meaning "a fractionally lower" FUMA across its forecast period.

"Our expense growth assumptions are unchanged, meaning a net effect of EPS reductions of -1%/-2%/1% across FY26/27/28," said RBC, which reiterated its 'sector perform' rating on the stock.

"Even after assuming an inflection to positive net flows, we still expect BRK's EPS growth to be at the lower end of UK wealth and platform peers, owing to the group's higher exposure to the lower-growth BPS market."

RBC said Brooks Macdonald currently trades on CY26e price-to-earnings ratio of 12x, a premium to its closest peer, Rathbones, despite having a shallower earnings growth trajectory.

As a result, RBC said it sees better value elsewhere in the UK wealth sector.