Broker tips: GB Group, Urban & Civic, BP, Shell

Analysts at Canaccord Genuity raised their rating on software firm GB Group from 'hold' to 'buy' on Wednesday, citing a possible upside to consensus estimates.

Canaccord, which also raised its target price on the firm from 565.0p to 870.0p, said it had "long admired" GB for its reliable low- to mid-teens percentage organic growth, benefiting from secular global themes such as fraud prevention and the increasing need for enterprises to "validate and verify" identities, location, age and other metrics for new and existing customers.

While they acknowledged that the company had "suffered more from Covid-19 than some of its software peers", largely due to 20% sales exposure to impacted sectors such as leisure, travel and gambling, the analysts said they now see "several positive momentum catalysts on the horizon" for GB.

"Organic growth and margins have likely troughed this year and should expand again in FY22," said Canaccord, which added that 2021 full-year consensus expectations of a 10% revenue and 39% adjusted earnings per share decline seemed "too pessimistic" given positive growth in the first quarter and "gradually improving demand" in some of its more impacted verticals.

Analysts at Berenberg reiterated their 'buy' rating on real estate developer Urban & Civic on Wednesday, stating there was "significant upside" to its "misunderstood" model.

Berenberg, which also reiterated its 'buy' rating on the stock, stated that since the start of the Covid-19 pandemic, Urban & Civic had underperformed the UK real estate sector by 25.5%.

However, the analysts said they continue to think that the underperformance was "unjustified" and said that investors were continuing to overlook the cross-cycle resilience of Urban & Civic's strategic land model.

The German bank said the upside to the group's model was still to come from a ramp-up in activity across immature sites, the potential for build-to-rent development to "boost returns significantly", the increased demand within core markets and its strong environmental, social and corporate governance credentials, which it feels should make the company "a core real estate holding for any ESG fund".

Analysts at Morgan Stanley said that upside to share prices for Big Oil stocks was beginning to materialise, even as it warned clients that it was best to wait before turning more positive on the space.

"For the first time since April, our price targets imply upside again, of ~10%," they said.

"However, credible bear cases still lie ~20% lower. There may be a moment to become more upbeat, but better opportunities probably lie ahead sometime in 1H21."

In the same research note, they lowered their target price for shares of Royal Dutch Shell from 1,050.0p to 991.0p and that on BP from 260.0p to 230.0p, while their recommendations for the two stocks were kept at 'equal-weight' and 'underweight', respectively.