Broker tips: Rotork, Trustpilot
JPMorgan Cazenove upgraded Rotork on Wednesday to 'overweight' from 'neutral' and lifted its price target on the stock to 370.0p from 365.0p.
"With the shares now trading near relative lows versus the sector, we see risk/ reward as more favourable, particularly with organic order growth likely to see improved momentum post a period of lower growth, a development we believe will increase investor conviction in the growth story, which is key for the shares to outperform," it said.
"We believe the group's trading update on the 20 November should be supportive of this trajectory while in the interim, Rotork has one of the more favourable end market exposures in our coverage (particularly in the event of a macro deterioration) and a structurally attractive mid-term story, with additional upside support from a strong balance sheet."
JPM said it expects order momentum to improve, noting that organic order and revenue growth has underperformed peers during this O&G recovery but it expects to see order momentum improve now, driven by Rotork’s higher exposure to midstream and downstream O&G.
JPM bank also argued that there was "plenty" of balance sheet optionality as it said Rotork was disciplined on M&A and it expects this to continue. However, it sees scope for further bolt-ons and buybacks.
Analysts at Berenberg slightly raised their target price on reviews platform operator Trustpilot from 260.0p to 270.0p on Wednesday following the group's interim results earlier in the morning.
Trustpilot said group bookings grew by 19%, while revenues increased by 17%, adjusted underlying earnings surged by 86% and adjusted free cash flow came in at $5.9m.
However, Berenberg said the key new information was that Trustpilot's FY24 outlook has now been upgraded, with management now expecting adjusted EBITDA to be at the top end of market expectations of $18.0m-22.0m).
"Current FY24E adjusted EBITDA consensus is at $20.0m, so we would expect a circa 6-10% upgrade," said Berenberg, which reiterated its 'buy' rating on the stock.
Additionally, the German bank noted that a new £20.0m share buyback has been announced and, as a result, Berenberg increased its FY24 adjusted EBITDA forecast by 6% and its FY25 adjusted EBITDA and EPS forecasts by 5% and 11%, respectively.