Broker tips: SSE, Gfinity, ITV, Victorian Plumbing

(Sharecast News) - Citi upgraded SSE to 'buy' from 'neutral' on Wednesday as it said the company was well placed to benefit from any long-term acceleration of energy transition. The bank cited SSE's portfolio of renewable and network assets, as well as the near-term protection they provide from a higher-for-longer inflationary environment.

"Backed by a credible financing strategy, visible dividend, and potentially meaningful earnings upgrades to come, we see SSE as in a sweet spot to benefit," Citi said.

Analysts at Canaccord Genuity placed their rating and target price for Gfinity 'under review' on Wednesday following the update, highlighting that although the increased revenue and reduced costs, translated into a smaller adjusted operating loss, the revelation that full-year revenues were now expected to fall short of expectations had forced them to reassess their stance on the stock.

The expected reduction in full-year revenues was due to a slower than expected return to live esports events and a material partnership that now looked like it would not be delivered until the next financial year.

The Canadian bank also highlighted that the group has announced plans to undertake a fundraise to secure a minimum of £1.0m in new working capital and vowed to revisit its rating and target price for the stock following the completion of said fundraise and the publication of its full first-half results.

Deutsche Bank downgraded ITV on Wednesday to 'hold' from 'buy' and cut its price target on the stock to 100.0p from 130.0p on a more balanced risk/reward scenario.

The bank said that in the longer term, it's positive on the broadcaster's ability to stabilise revenue as it should be able to offset the decline in linear TV advertising revenue with growth in online advertising and other digital avenues such as SVOD subscriptions.

"However, ITV's decision to aggregate its streaming platforms into one new platform, ITVX, due to be launched in Q4-22, comes with added costs related to content and launch - and prompts our move to the sidelines," it said.

"We think there will continue to be a risk of increasing investments to make the platform compelling versus global peers already in the market."

DB said that while management expects incremental revenue from the initiative to offset incremental costs by 2026, in the near term we are likely to see more front-loaded costs impacting margins.

Analysts at Berenberg almost halved their price target for specialist retailer Victorian Plumbing from 130.0p to 70.0p on Wednesday as they lowered the group from 'buy' to 'hold', citing inflationary headwinds.

Berenberg said Victorian Plumbing's annual general meeting trading update on 24 February highlighted the fact that higher-than-expected inflation was impacting margins.

The German bank highlighted that while the group had outperformed the market, it expects retail DIY demand normalisation to continue to drag on top-line performance.

"Although a challenging market environment provides scope to capitalise on sub-scale peers - which is positive in the long term - with sales and margin headwinds likely to continue, we believe there are only a limited number of positive catalysts to drive improved investor sentiment," said the analysts.