Broker tips: Sumo Group, Go Ahead Group

Analysts at Berenberg raised their target price on video games developer Sumo Group from 190.0p to 270.0p on Thursday following the firm's first "significant" acquisition.

Berenberg pointed out that after waiting patiently for two years, Sumo had made its "first major acquisition", with completion anticipated in October.

This, alongside an "impressive" set of interim figures showing more than 25% organic growth and better-than-expected recruitment and client wins, puts Sumo in "a very good position" for 2021, according to Berenberg.

"Organically, we would be upping our forecasts for FY20 by mid-single digits," said the analysts.

However, after the company's acquisition of Pipeworks, Berenberg raised its 2021 and 2022 earnings per share forecasts by 14 and 22%, respectively.

"Given the equity raise ahead of the acquisition and only a small pro-rata contribution of EBITDA in this current financial year, EPS is unchanged," highlighted the German bank, which reiterated its 'buy' rating on the stock.

Analysts at Canaccord Genuity slashed their target price on transport operator Go-Ahead Group from 1,500.0p to 950.0p on Thursday after the Covid-19 pandemic took its toll on the firm.

Canaccord said the coronavirus pandemic was "clearly having a significant impact" on Go-Ahead's operations, especially its regional bus unit.

However, while the Canadian bank said there may very well be "a lasting impact on travel patterns", it believes a "significant proportion" of Go-Ahead's pre-Covid-19 traffic will return and expects that the group can "right-size its business" to protect margins if necessary.

"We have trimmed our forecasts for the coming years, reflecting a slower recovery for regional bus, and reduced our price target to 950.0p," concluded the analysts, who also reiterated their 'buy' rating on the stock.

"We expect a limited profit contribution in the current year, with a meaningful recovery in subsequent years. Rail is expected to break-even, with modest de-risked UK profits offset by overseas losses."