Broker tips: Hargreaves Lansdown, Gulf Keystone Petroleum, Crest Nicholson

Shore Capital raised Hargreaves Lansdown to 'hold' after a fall in the investment platform's share price.

Hargreaves' shares briefly exceeded £19 after its well-received annual results in June but have since fallen below £16, Shore's estimate of fair value.

The shares have fallen because of weaker equity markets and a better understanding of the company's exposure to low interest rates, Shore analyst Paul McGinnis said. He upgraded the shares from 'sell' and kept his price target of £15.75.

The market has recognised its earlier over-exuberance based on the short-term windfall in retail share trading to focus on the slower but potentially long-term effect of prolonged low interest rates on returns from holding client cash. McGinnis had downgraded Hargreaves to 'sell' after the results.

"Without making any change to forecasts, we reverse the 'sell' recommendation introduced in our post-results note," McGinnis wrote in a note to clients. "We continue to regard the HL business model to be one of the best in the entire UK market and consider the company to be well-aligned to long term growth drivers, the negative stance being a value call."

Analysts at Berenberg lowered their target price on exploration and production group Gulf Keystone Petroleum from 210.0p to 195.0p on Monday.

Berenberg said Gulf Keystone's first-half results demonstrated "strong operational performance", as well as the potential for near-term incremental growth and highlighted the company’s net cash balance sheet, which it added remained "a differentiator" versus most peers.

However, the German bank added that working capital outflows should result in a lower year-end 2020 cash position than previously forecast and also highlighted that uncertainty remained around the path to completing its 55,000 barrel of oil per day expansion.

"The lower expected investment in 2020 will result in a reduction in payables, which was not previously captured in our forecasts," said Berenberg, which now assumes a working capital outflow of roughly $13.0m in the second half.

The analysts, which reiterated their 'buy' rating on the stock, also said they flagged no concerns about Gulf Keystone's balance sheet, given that it had no debt maturity until 2023.

Deutsche Bank upgraded shares of housebuilder Crest Nicholson on Monday to ‘buy’ from ‘hold’ and lifted the price target to 250.0p from 202.0p as it said strong action has been taken to address the cost base and the stock is attractively valued.

Analyst Jon Bell said: "Crest has misfired more often than my 14-year-old BMW but its current management team - still relatively new to their seats - has a steely (and welcome) determination about it.

"And as I sat in the gallery of the Chartered Accountants' Hall on a cold January morning listening to the company's FY results presentation, it was there for all to see. CEO Truscott and CFO Cooper had allowed no grass to grow under their feet.

"Quick to identify the company's swollen cost base, remedial action swiftly followed: next year's administrative expenses should be almost a third lower than 2019A levels; and two-thirds of £30m per annum procurement savings had been embedded by the time of the interims."

Bell said the benefits remain latent, obscured by the market's focus on the pandemic, but should bear fruit in the medium term.

He said the release of pent-up demand and the benefits of the Stamp Duty holiday have improved the near-term pricing outlook for the company. In the case of the latter, this is particularly so in the company's core South East footprint, it said, raising the possibility that it could report results towards the top end of its indicative range.