Broker tips: Standard Life Aberdeen, Senior, Persimmon

Deutsche Bank upped its recommendation on shares of Standard Life Aberdeen on Thursday to 'buy' from 'hold' and lifted the price target to 335.0p from 310.0p.

It said SLA has been through the trenches since its merger but the new chief executive and new group targets offer a clear focus as to how the current headwinds can be addressed.

"Even on our assumption of only partial delivery, we now see core fund management profits doubling over the next three years - with further upside in 2024. This in turn implies a 33% uplift to our 2023 estimated profit forecast," it said.

"While we recognise that we could be a little early given that the improved earnings will only begin to emerge next year, we believe that net flows have already started responding to an improved investment performance."

Extra evidence of this in the next few months skews the risk more towards the upside than the downside, it added.

"Meanwhile, the valuation (a look-through price-to-earnings of just 7.4x on the core business) appears to give no credence to a possible recovery," DB concluded.

Analysts at Berenberg raised their target price on manufacturing firm Senior from 85.0p to 112.0p on Thursday but cautioned that the group's profit outlook remained "unclear".

Berenberg said Senior was considered a favoured way to play the "reopening trade", given the group's exposure to both aerospace and industrial end-markets, a theory that had been reinforced by positive 737 MAX momentum and a broader market rotation into value stocks, with the shares the best performing in the sector year-to-date

However, the German bank stated that Senior continues to face "a long and uneven recovery path ahead", and said it still struggles to be "more constructive" on the equity story without higher conviction in its profit forecasts.

"With the shares now trading in line with the sector on 17x consensus 2023 price-to-earnings ratio, we think they are fairly valued," said Berenberg, which made the move to raise its target price on the stock due to higher peer multiples and modest upgrades to outer year estimates.

Berenberg also stood by its 'hold' rating on the stock, stating it think there limited material upside to its sales or margin forecasts remain over the near-term, with the potential for further downside should the recovery profile take longer than expected.

UBS downgraded its stance on shares of Persimmon on Thursday as it took a look at the UK housebuilding sector.

The bank cut Persimmon to 'neutral' from 'buy' and reduced its target price on the stock to 2,915.0p from 3,070.0p, stating the risk/reward ratio was now more balanced after the stock delivered a more than 20% total shareholder return since the start of 2020.

"Shares trade at a considerable premium on P/TNAV of 2.75x (sector 1.6x) which reflects substantially higher returns," it said.

"While we like Persimmon's attractive margin and return profile, we think the shares no longer prices in a material erosion of this and therefore we think the stock fairly reflects these superior returns."

UBS said it remains positive on the sector overall and continued to think there was upside, although it was more limited at around 15% on average after the recent rally.