Broker tips: Kaz Minerals, Whitbread, Easyjet

Kaz Minerals got a boost on Friday as Credit Suisse upgraded its stance on the stock to ‘outperform’ from ‘neutral’ and hiked the target price to 630p from 370p.

It noted that over the past two years, Kaz’s growth outlook has been met with fears over operational delivery and funding shortfalls. However, the Bozshakol mine has reached commercial production and is contributing cash flow, the Aktogay mine is now ramping up at an even faster rate and the funding risk is now limited even under bearish copper price assumptions.

"We think this justifies Kaz moving to a more de-risked valuation and thus upgrade," CS said.

CS pointed out that the company has consistently guided to around 300kt of production in 2018 versus 140kt in 2016 and said this looks achievable.

The bank also said while debt levels are high, given the strong operational performance, new debt facilities raised, reduced project capex and the cash buffer of around $1.1bn, the risk of a funding gap is limited.

Premier Inn and Costa owner Whitbread was under the cosh on Friday after Goldman Sachs downgraded the stock to ‘sell’ from ‘neutral’ and cut the price target to 3,900p from 4,000p.

Goldman said it sees the company lagging the broader UK hotel industry with only around 1% revenue per available room expected this year versus the UK year-to-date average of 7%, adding that the valuation fails to reflect this.

“While we usually see a lag between FX weakness and tourist volume pick-ups, we think Whitbread is unlikely to benefit from the trend due to its largely regional business exposure."

The bank said it already sees Premier Inn delivering weaker growth versus UK RevPAR YTD and reckons like-for-like sales growth at Costa will be under pressure from still weak footfall trends and a more uncertain consumer outlook in the UK.

With the low cost airline industry improving structurally, HSBC upped its price target on Easyjet as it expects evidence of the airline’s recovery to mount through the summer.

The bank, which held its 'buy' recommendation, raised its target price to 1,550p from 1,450p as it made small upgrades to its profit estimates after raising load factor and trimming reported yield reduction estimates, buoyed by increasing evidence that the current quarter will be a strong one.

Reported traffic and load factor data for April were strong across the board, while qualitative data on revenue per available seat kilometres from the likes of Norwegian and Transavia showed RASK clearly up.

"Absent the Easter effect we expect more moderate traffic and revenue trends in May and June. Looking to the peak summer quarter we think EasyJet will benefit particularly from its standout weak comps last year."

Disruption has been moderate so far this year and EasyJet "may be a marginal beneficiary" from the recent BA computer system meltdown.