Broker tips: Persimmon, BT Group

Analysts at Canaccord Genuity nudged up their target price on homebuilder Persimmon from 2,930.0p to 2,940.0p on Friday, stating it expects an "impressive" second-half recovery.

Canaccord noted that at the time of Persimmon's interim results, it had highlighted that it saw upside risk to its amended 2020 forecasts.

However, with the construction industry set to continue to operate through the current lockdown and the group having "positioned itself well" to deliver a strong second-half recovery, it opted to increase its 2020 full-year forecasts ahead of the firm's trading update next week.

"We expect the update to be positive and confirm a very good recovery in H2 completions at good margins," said the analysts, who pointed to "an impressive restart" following the UK's first lockdown.

Given recent industry trends and Persimmon's "strong" position, Canaccord now expects an "impressive" first-half profit performance, mirroring management hints that it could even be the group's "strongest" second-half performance in its history.

"There is clearly ongoing macro risk into 2021 but we believe the group continues to have one of the best balance sheets to absorb any macro shock relatively well and the extension of the furlough scheme arguably mitigates near-term macro risk," said Canaccord, which also reiterated its 'buy' rating on the stock.

Analysts at Berenberg slightly raised their target price on telecommunications provider BT Group from £1.40 to £1.55 each on Friday despite the group experiencing "a frustrating quarter".

Berenberg acknowledged that BT's second-quarter results from last week were "a beat and guidance raise", with the group's new 2022/23 underlying earnings guidance of at least £7.9bn being 4% above previous consensus estimates.

However, the German bank said that in trying to prevent free cash flow expectations from getting ahead of themselves, BT management had inadvertently "spooked the market" and raised concerns around possible FCF downgrades.

As a result, Berenberg said what should have been "a good quarter" for BT was reduced to a "nothing done" for the stock.

"More patience for the bull case is thus needed, but we are willing to wait, as we consider calendar H1 2021 a catalyst-intensive period, in which the investment case will gain much clarity," concluded the analysts, who kept their 'buy' rating on the stock.