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Broker tips: Flutter, Standard Chartered
(Sharecast News) - Analysts at Berenberg cut their target price on bookmaker Flutter from 15,500.0p to 13,800.0p on Thursday but said the stock still offered up "quality at a reasonable price". Berenberg said Flutter was a 'top pick' in the leisure space, noting that since it upgraded the stock to 'buy' from 'hold' in November, shares had fallen by close to 30%.
While the German bank said there were reasons for this - earnings downgrades in the UK & Ireland and international divisions, falling US sports-betting and online gaming valuations, and some heightened regulatory risks - it feels the stock's current valuation was "not reflective of the quality of the business".
Berenberg said Flutter's full-year results were in line with expectations, with its Australia and US divisions offsetting an "underwhelming" performance in the UK.
"The introduction of safer-gambling policies, tied in with a string of customer-friendly results, explains some of this performance, but compared to peers it does seem Flutter underperformed in Q4," said the analysts. "We adjust our numbers for these results, as well as factoring in the disruption in Russia/Ukraine, which together contributed £60.0m in FY21."
However, Berenberg stated that while the downgrades as a result of Russia/Ukraine and the UK & Ireland division were "a negative", it insisted that the subsequent share price reaction since the results was "overdone" and reiterated its 'buy' rating on the stock.
Deutsche Bank analyst Robert Noble reiterated his 'buy' recommendation for shares of Standard Chartered, stating the lender's profitability was set to expand significantly through 2024.
Noble said StanChard shares offered "substantial value", estimating that the stock was trading on a 2024 price-to-earnings multiple of 4.3x and a 0.4x tangible book value.
The DB analyst also noted that the lender was targeting a return on tangible equity of greater than 10.0% by 2024.
However, Noble did concede that StanChart was unlikely to show the improvement in so-called 'jaws' during the first quarter required by the longer-term path to its target for a return on tangible equity of greater than 10.0% and said he believes that it will take some time to close the valuation gap.
Noble also bumped up his target price on the stock from 610.0p to 620.0p.
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