Liberum initiated coverage of newspaper and magazine publisher Reach on Tuesday with a ‘buy’ rating and 475.0p price target as it said the shares have done well in recent months, but are at the start of the next growth phase.
“We believe that Reach can attain an inflection point at which growth in digital begins to offset declines in print faster than the market is currently anticipating,” the broker said.
“Print advertising is structurally declining but is profitable and cash generative and, considering that the cohort of customers who purchase newspapers have circa 10-15+ years before they are essentially underrepresented, there are sufficient cash flows to fund investment into growing digital.”
Liberum also noted that circulations were resilient given the habitual nature of buying newspapers and were “relatively inelastic in essence”. The broker sees low/mid-single-digit declines moving forward.
JPMorgan Cazenove and Citi both initiated coverage of recently-listed Bridgepoint on Tuesday.
JPMorgan started coverage of the shares at ‘overweight’ with a 600.0p price target as it argued that growth in assets under management and operational leverage will drive strong earnings growth.
“Bridgepoint has delivered 13% AUM compound annual growth rate (2011-20), outpacing the industry 10% CAGR (2011-20),” JPM said.
Citi started Bridgepoint at ‘neutral’ with a 513.0p price target, highlighting strong mid-market private growth but a “rich” valuation.
The bank said key strategies include mid-market, lower mid-market and growth in private equity, as well as credit opportunities, direct lending and syndicated debt in private credit.
“We like the long-term growth prospects, but our sum-of-the-parts valuation (for management fees, performance fees & co-investment) suggests the share price is already full, post recent appreciation.”
