Broker tips: Kodal Minerals, Rightmove, AJ Bell

(Sharecast News) - Analysts at Canaccord Genuity raised their target price on exploration and development firm Kodal Minerals from 1.50p to 1.65p on Monday following the group's new agreement with joint venture partner Hainan Mining to complete the financing package for its Bougouni lithium project. The package was previously conditional upon the mining licence being transferred by the Malian Government to the new JV entity. However, Canaccord pointed out that although there had been administrative delays since the package was announced, this condition has now been waived in anticipation of the licence transfer occurring during construction.

"In return, Kodal has agreed warranty/indemnities up to $100.0m in the case that the licence is not transferred. We consider this outcome unlikely," said Canaccord.

The Canadian bank said Kodal's roughly $118.0m financing package fully funds the initial 130 kilotonnes per annum development and also provides additional capital to advance exploration and other projects in its portfolio.

"Early works have already commenced and the company anticipates a ~12-month process to production of first spodumene concentrate. This suggests that Kodal is likely to be the first London-listed lithium stock with cash flow in CY24," said Canaccord, which reiterated its 'speculative buy' rating on the stock.

Berenberg upgraded Rightmove on Monday to 'buy' from 'hold' as it said the selloff since the OnTheMarket/CoStar deal was announced was overdone.

The German bank noted that Rightmove has traded down 17% since OnTheMarket announced on 18 October that it had agreed to be taken over by US commercial real estate information group CoStar in a £99m deal.

"We think this is an overreaction, so we upgrade our rating to a buy as we retain our conviction that Rightmove will remain the number one property portal in the UK and will be largely unaffected by the new market dynamic," it said.

Berenberg, which reiterated its 605.0p target price on the stock, said the share price weakness provides an attractive entry point, with the shares trading on 19.6x FY24 price-to-earnings.

"We think the fears that CoStar would be able to take share away from Rightmove are overdone for three key reasons: 1) the barriers to success are high given the impact from network effects; 2) Rightmove's ability to retain its leading position from its UK competitors; and 3) evidence of failed attempts from other international companies attempting to enter the UK portal market suggest the status quo will remain."

Citi downgraded AJ Bell to 'neutral' from 'buy' on Monday, saying it was awaiting "a better entry point".

"We are constructive on AJ Bell's growth opportunity," it said. "Our AUA estimates are 1-3% above consensus, driven by higher net flows. Yet we have become increasingly concerned about margin risk."

It said the FCA's Consumer Duty regime has been more disruptive than expected, and that it expects growing pressure for UK platforms to pass on higher interest to their customers.

Citi said it had reviewed risks to cash margins in detail and concluded "that AJ Bell is among the most exposed".

The bank added that it prefers AJ Bell to sell-rated Hargreaves Lansdown.