Berenberg upgrades Northgate as risks priced in

Berenberg has upgraded Northgate from ‘sell’ to ‘hold’, citing the downside risk being priced into the stock.

It said over the last five months, the company has seen a 40% fall in its share price as “lacklustre end-market growth and new depreciation policies have weighed on top-line and margin development."

That has led the company to issue guidance of flat profit before tax for the next three years.

“As a result of this, combined with the fear of residual value deflation and an increasingly competitive landscape, it is unsurprising that the shares have seen a substantial pullback.”

With that in mind, Berenberg revised its target price down from 455p to 400p, but upgraded its rating.

“We…appreciate that the major downside risk it now priced into the valuation.”

At 1009 GMT, shares in Northgate were up 1.6p (0.41%) to 393.4p.