Broker tips: Gamesys, YouGov

Analysts at Canaccord Genuity took a fresh look at gaming technology firm Gamesys on Tuesday, stating the company's third-quarter update should provide "re-rating impetus".

Canaccord expects Gamesys to release a third-quarter trading update with positive revenue growth numbers likely running ahead of its interim forecasts of 14% after current trading was reported to be "strong" across its major markets back in August.

The Canadian bank pointed out that since then, competitor reports had suggested that activity levels had remained elevated in the third quarter, particularly in UK casino and bingo operations.

Whilst Canaccord acknowledged that Asian revenues tended to be "more volatile", its forecasts had been conservatively struck and that it now estimates third-quarter revenue growth to come in at 16% up to £168.1m.

"As such, we continue to believe the forecast risk remains on the upside, despite the uncertain macro-economic outlook," said Canaccord, which "strongly" reiterated its 'buy' rating and 1,320.0p target price on the stock.

"We think there is scope for a re-rating given the discount the stock trades on to the peer group on just 7.1x FY21E EV/EBITDA compared to the sector average of 9.9x."

Analysts at Berenberg raised their target price on market research company YouGov from 920.0p to 1,020.0p on Tuesday after the firm's full-year results came in slightly ahead of consensus.

In Berenberg's view, the underlying drivers outlined in YouGov's full-year report card will be the focus for investors, with strong like-for-like growth within its custom research unit likely going a way to raise confidence that the company was delivering on its five-year strategic targets.

This prompted the analysts to upgrade their earnings per share forecasts by 4%, 11% and 17% in 2021, 2022 and 2023, respectively.

The German bank acknowledged that current macro-economic conditions still warranted "some caution", but highlighted that YouGov's 2020 results proved that it had "a superior data platform" and "material growth opportunities".

"It is supported by fast-growing data products and a burgeoning opportunity to target larger research engagements across the market," said Berenberg, which also maintained its 'buy' rating on the stock.