Broker tips: Yellow Cake, Informa

Analysts at Berenberg raised their target price on uranium group Yellow Cake from 744.0p to 883.0p on Thursday following a fireside chat with chief executive Andre Liebenberg and Dustin Garrow, managing principal at Nuclear Fuel Associates and chief commercial officer of 308 Services.

Berenberg said it came away from the chat with the view that the uranium's price rally can be sustained, with tight supply, plus existing supply disruptions, as well as delays to new projects, thin spot markets and a positive demand outlook from both growing utility demand and small modular reactors, plus the ongoing headwind of falling coverage ratios, particularly for US utilities, all pointing to prices being well underpinned with scope for further disruptions to push the price of uranium higher.

The German bank, which reiterated its 'buy' rating on the stock, also noted that underpinning this and providing more upside risk for prices, scope remains for the US government to ban imports of Russian uranium, providing a further dislocation of trade flows and impacting supply of uranium into the US, creating an energy security risk.

"We think that uranium prices are likely to remain elevated and think that there is scope for further price appreciation due to the tight markets and ongoing supply risk. We lift our price to $102.50/lb for 2024 and remain of the view that prices can spike even further from current levels," said Berenberg. "This lifts our Yellow Cake price target to 883.0p per share. Yellow Cake is trading at a 14% discount to pro-forma net asset value and we see a clear trade here for investors to generate alpha through the NAV discount arbitrage."

Bank of America said it sees 40% upside in the share price of Informa after raising its target price for the publishing, business intelligence, and exhibitions group on Thursday.

The bank lifted its target from 1,020.0p to 1,050.0p and reiterated its 'buy' stance on the stock, noting that in terms of Informa's enterprise value-to-underlying earnings valuation, it trades on an "inexpensive" 11.0x multiple on 2024 estimates.

"For this, an underappreciated faster growth profile vs. pre-COVID, resilient c.13% profit growth in 2024E, and scope for further buybacks/M&A does not look fully priced in," Bank of America said.

The US bank said that, given the company's track record and growth drivers, it should be able to meet the top end of adjusted EBITDA guidance of £945.0m-965.0m this year.

"We are upbeat on another year of above-normal growth for events, buoyed by diversified/ attractive geographic exposure (e.g. Saudi Arabia), leading brands and scope for further price/yield recovery which aids margin delivery and de-risks the growth profile. M&A remains a potential catalyst, and we still see scope for buybacks to potentially be extended."