Proactive Investors -
- FTSE 100 up 29 points at 7,350
- UBS says Rolls-Royce (LON:RR) could reach 600p in upside case
- Berenberg tips 888 Holdings (LON:888), price target 190p
Berenberg tips 888 as a winner
Shares in 888 Holdings PLC (LON:888) were in the winners enclosure on Thursday, up 4.3% to 130.32p, as analysts at Berenberg tipped them for further progress.
The betting operator has been plagued by a number of issues so far in 2023 and reported first half revenue and Ebitda below expectations earlier this month.
The broker highlighted performance in the retail channel was encouraging, although its online performance was softer than anticipated.
Synergies of £150 million are now expected to be delivered in 2024, which is a year earlier than anticipated, and the group reduced leverage to 5.1x, “providing us with further confidence in 888’s ability to meet its FY25 leverage target.”
“These factors, aided by the appointment of a CEO with a proven track record, provide us with further confidence in 888’s ability to deliver a continued reduction in leverage,” Berenberg said.
Per Widerström was recently appointed CEO, and the announcement of a new CFO is expected shortly.
“With everything considered, we reiterate our Buy rating and our price target of 190p”, the bank added.
Goldman Sachs sees UK rates peaking at 5.75%
After yesterday's weak PMI figures, Goldman Sachs (NYSE:GS) expects two more interest rate rises by the Bank of England, with a peak of 5.75%.
Goldman's Sven Jari Stehn predicts a 25 basis point rise at the next meeting on September 21.
"Given mixed progress on the BoE’s watchlist with weak labour market activity, strong wages and slightly firmer services inflation - similar to the split verdict in the run-up to the August meeting - we expect a further 25bp hike," he said.
He thinks a 50bp move would likely require notable upside surprises across all indicators, including labour market activity but given the weakness in employment and the flash PMI "we therefore see a very high hurdle for a 50bp move in September."
Stehn believes that further tightening is probably needed to slow labour demand sufficiently to cool wage growth to 3% and therefore predicts another 25bp hike in November for a peak Bank Rate of 5.75%, "somewhat below market pricing."
He then expects the Monetary Policy Committee to maintain the peak rate for an extended period to keep policy sufficiently restrictive with the first cut in the third quarter of 2024.
"We therefore view a range of 5.5%-6.0% as reasonable for the terminal rate, with market pricing clustering towards the upper end," he added.
Profits slip at Harbour Energy
Harbour Energy PLC (LON:HBR) reported a fall in interim profit and lowered the top-end of its production guidance pushing shares a touch in early trading.
The North Sea’s biggest operator reported pre-tax profit in the six months to June of US$0.4 billion, down from USD1.5 billion a year ago, but swung into the red after tax to the tune of US$8 million driven by a higher UK tax rate and one-off tax charges.
It said this was mainly caused by the UK government's introduction of the energy profits levy (EPL) driving the headline tax rate on oil and gas profits up to 75% from 40% last year.
In response to the EPL, Harbour said, "we scaled back our activities in certain areas and acted decisively to manage our cost structure," including a review of its UK organisation. It expects this to deliver around US$50 million in annual savings from next year.
Analysts at Stifel said the results “illustrate the business operationally performing well.”
It retained a buy rating and 480p price target while shares were 1.8% lower at 237.80p.