Broker tips: Asos, Corero Network Security, Liontrust Asset Management
Liberum lifted its price target on Asos to 700.0p from 500.0p on Tuesday and maintained its 'sell' rating as it sees "significant" risks in its strategy to improve profitability and remains unconvinced it will be able to fully deliver.
"Although we note that consensus estimates remain conservative and our forecasts for FY’24E and FY’25E are ahead of consensus, the balance sheet remains stretched," the broker said.
"As a result, there remains significant risk that, in a plausible downside scenario, the group may need to raise further cash from the equity market at a significant discount to current share price which keeps us from going any more positive on the stock."
Liberum said its new target price reflects the broker's upgraded estimates for outer years but does not reflect the potential for an equity raise.
Analysts at Canaccord Genuity issued security systems services firm Corero Network Security with a 'speculative buy' rating and 10.0p target price on Tuesday after placing the stock under review.
Canaccord Genuity said following Corero's January update, its full-year results confirmed figures telegraphed earlier, with revenues of $20.1m implying an overall reduction of 4% year-on-year driven by a 22% decline in more volatile software licence and appliance sales.
The Canadian bank also noted that the softening macro environment had started to impact Corero in late Q3, similar to peers, with its new forecasts now assuming a return to +7% growth in 2023, supported by 13% growth in order intake and annual recurring revenues last year, roughly $2.0m in new orders in Q1 and easing comparatives in the "seasonally important" second half.
"On our new estimates, the shares trade on a CY2023E EV/sales multiple of 1.7x; this is too low, in our view, given Corero's strong DDoS protection offering, >60% recurring revenue share, and cybersecurity software peers trading on 2-3x. This is also well below industry M&A multiples with the ongoing ~£2.90/share buyout of Kape Technologies implying 2.4x EV/sales while DDoS peer Imperva was acquired by Thoma Bravo in 2018 for 6x," said Canaccord.
Analysts at Berenberg dropped their target price on asset manager Liontrust from 1,100.0p to 950.0p on Tuesday as it said the group was "continuing to weather a challenging market".
Berenberg stated that Liontrust's full-year results had come in ahead of consensus expectations, with the company generating a higher-than-expected level of performance fees.
However, the German bank did note that the business did see its client asset base decrease, with continued net outflows in Q4.
"Although the market environment continues to remain uncertain, Liontrust's multi-team model and exposure to sustainable funds position it well for the longer term, in our view," said Berenberg, which stood by its 'hold' rating on the stock.