Skip Header
Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

Broker tips: Segro, Admiral, Rolls-Royce

(Sharecast News) - Citi has raised its target price for Segro from 1,069p to 1,149p and reiterated a 'buy' rating, hailing the industrial real estate group's structural growth ahead of an upcoming expected fall in interest rates.

"We reiterate our 'buy' rating on Segro as real estate markets navigate the remainder of the cyclical trough and look forward to next-cycle upside, that for Segro we expect has begun," the US bank said in a research note.

"Segro's investment case is one of structural rental growth from the gradual march of online retail, increasing supply chain robustness, urban demand growth, and a demand inflection for data centres."

Citi reckons that Segro's portfolio will generate like-for-like rental growth per annum of 7% over the long term, "if not more", and that the portfolio value has 35% upside. Completions in developments and future acquisitions could also significantly upgrade earnings over the next few years.

"The stock could return to historic bull market multiples as cyclical confidence builds that could create further upside," Citi said.

Berenberg upgraded Admiral on Tuesday to 'buy' from 'hold' and lifted the price target to 3,127p from 2,973p, citing an attractive valuation.

"Investor Warren Buffett once said: 'It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.' Fortunately, today investors can buy Admiral, a wonderful company, also at a wonderful price."

It noted that since it downgraded the shares in December, they have gone sideways. The stock has de-rated and underperformed the sector by around 10%. However, Berenberg reckons they now look cheap again.

The bank also pointed out that Admiral is trading towards the bottom end of its price-to-earnings range and said it thinks there is scope for further earnings per share upgrades, in particular because it feels the price increases are still not appropriately reflected in consensus estimates for 2024. Berenberg is now 20% ahead of consensus EPS for FY24E.

Deutsche Bank hiked its price target on Rolls-Royce to 555p from 465p on Tuesday as it revisited the valuation ahead of first-half results.

The bank said the first-quarter update provided evidence that execution at Rolls-Royce is improving.

"While our 2024-2027 estimates are broadly unchanged, our degree of confidence in the company's ability to deliver on its transformation programme has increased," it said.

"Ahead of the H1 release on 1 August, we adopt a scenario described in a previous note: we move our valuation to 2027e, based on increased confidence in 2027 target attainment."

DB rates the shares at 'buy'.

At 1215 BST, the shares were down 3.8% at 453.40p, taking a hit from the profit warning from Airbus late on Thursday.

Share this article

Related Sharecast Articles

Europe close: London and Frankfurt stocks post new records
(Sharecast News) - European stocks finished mildly higher on Tuesday despite rising concerns about an escalating trade war, though gains were only mild with the Stoxx 600 eking out a new record high.
Broker tips: Entain, Celtic
(Sharecast News) - Berenberg slightly raised its target price on bookmaker Entain from 1,010.0p to 1,035.0p on Tuesday, stating it was "continuing to bet" on the BetMGM turnaround.
London close: Stocks mixed on US tariffs, Mann comments
(Sharecast News) - London stocks closed mixed on Tuesday after the FTSE 100 touched fresh record highs, as investors weighed the implications of US president Donald Trump's latest tariff comments and remarks from Bank of England policymaker Catherine Mann.
Director dealings: Franchise Brands non-executive director snaps up shares
(Sharecast News) - Franchise Brands revealed on Tuesday that non-executive director Louise George had acquired 100,000 ordinary shares in the AIM-listed multi-brand franchise business.

Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

Award-winning online share dealing

Search, compare and select from thousands of shares.

Expert insights into investing your money

Our team of experts explore the world of share dealing.