Broker tips: S&U, Croda

(Sharecast News) - Analysts at Berenberg hiked their target price on motor and property lender S&U from 1,700p to 2,350p on Tuesday following the group's fourth-quarter trading update. S&U reported year-on-year improvements in all key KPIs in its larger Advantage business unit relative and, while not yet disclosed, Berenberg expects that it has driven most of the recovery in the firm's group loan book.

In its smaller Aspen business, Berenberg noted that lending "was strong", but it added that so were repayments, meaning loan book growth was likely to be slower than in Advantage.

The German bank, which has a 'hold' rating on the stock, noted that in terms of funding, S&U has upsized its revolving credit facility to accommodate growth plans as the group loan book was being rebuilt.

"Considering that the update contains no information about the size of the net receivables book by division, or yields on those respective books, we leave our headline earnings estimates unchanged for now," added Berenberg.

"The only update we make is to increase the dividend per share for the year from 103p to 112p, reflecting the higher than expected second interim dividend announced in the statement, which increased from 30p to 35p."

Croda shot to the top of the FTSE 100 on Tuesday after JPMorgan reiterated its 'overweight' rating on the shares and hiked its price target on the stock to 4,000p from 3,600p.

The bank said its bullish stance on Croda was based on the fact that the earnings downgrade cycle is behind us and on expectations that sharpening company execution will drive better organic growth from recent significant organic and inorganic growth investments.

JPM also said that market pessimism on fundamentals appears excessive and that improving earnings growth delivery leaves some room for a re-rating.

"We also expect the new mid-term financial framework, to be announced with FY25 results on 24th February, to reassure," it said.

JPM said it has trimmed its FY26/27 estimated adjusted EBIT and adjusted EPS by 1% to reflect the incremental FX headwind, but its estimates remain higher than consensus.