Broker tips: Next, GB Group, Scotgold

Barclays initiated coverage on shares of retailer Next at ‘overweight’ on Tuesday, with a 7,200.0p price target.

The bank said Next is transitioning from a UK store-based retailer into a multi-channel, multi-geography platform.

"Indeed, Next has made more progress in this direction than some may appreciate - we expect UK stores to contribute just 31% of sales and 14% of EBIT by calendar 2022.

"With its online business generating mid-teens percentage sales growth and margins, Next offers an interesting mix of growth and cash returns."

Barclays estimates that Next can return around 8.4% of its market cap over the next five years.

"The share price has admittedly risen by more than 80% since April, but for investors with a longer-term horizon we think the shares still offer attractive upside."

Analysts at Berenberg hiked their target price on data intelligence outfit GB Group from 680.0p to 1,020.0p on Tuesday, stating it was time to buy the company's multi-year growth story.

Berenberg said it had always maintained that GB Group was "one of the highest-quality and most attractive" companies in its coverage.

With consensus too bearish on Covid-19's impact on 2021 full-year results, merger and acquisition catalysts building and the opportunity for its organic growth rate to accelerate in 2022 and beyond under-appreciated, the analysts felt it was time to upgrade the stock to 'buy'.

The German bank highlighted that its underlying earnings estimates for GB were 15%/10%/5% ahead of consensus in 2021-23, respectively.

Berenberg, which also upgraded the group from 'hold' to 'buy', said GB's point of difference was "clear" and stated that with Covid-19 accelerating e-commerce adoption and corporate digital transformation agendas, the company will benefit from higher global demand for fraud prevention, identity management and digital compliance software.

Analysts at SP Angel hiked their target price for shares of Scotgold by 29% to 182.0p, arguing that investors were overlooking the potential upside from the outfit's Cononish gold and silver mine in Scotland.

In a research note sent to clients, analyst Sergey Raevskiy said that with £12.0m of capital outlays at Cononish already disbursed, the net asset value from the project to Scotgold was currently £103.0m or 182.0p per share.

That took into account both the firm's estimated net debt position and the effects of recent equity raisings, the analyst said.

"We highlight that no value has been assigned to an exciting exploration package reflecting its current early stage status that in turn offers further upside potential to our NAVPS subject to results of future exploration works," Raevskiy said to clients.

"We reiterate our 'buy' recommendation and look forward to the news of the Cononish commissioning next month."