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Royal Mail, MAN Group, Kainos Group

  • Citigroup cuts SSE rating
  • In-house broker gives Scotgold Resources a ‘Buy’ rating
  • Peel Hunt downgrades Royal Mail to ‘Sell’
  • JP Morgan Chase reiterate ‘Overweight’ rating for MAN Group
  • Canaccord Genuity upgrades Kainos Group rating

Citigroup cut SSE (LON: SSE) to ‘neutral’ (buy) on Monday, raising the price target to 1,937p (from 1,829p), as calls intensify for a windfall tax on electricity generators and energy companies. The government has yet to decide on whether to impose the levy, but it seems many investors decided to take Citigroup’s cue, and shares in the company slumped almost 11%, reaching 1,713p at close of the day’s trading. The shares have since regained some ground, and in early morning trading today were at 1,839p, a robust return of 13.19% YTD and 20.32% over 12 months.

Scotgold Resources (LON: SGZ) has made two key hires that will drive forward the company’s operations at Cononish, Scotland’s first commercial gold mine, says in-house broker SP Angel, giving the stock a ‘buy’ rating. Sean Duffy arrives as chief financial officer, with more than 25 years of finance experience with Adriatic Metals, Black Dragon Gold, Asian Mineral Resources, Anglo Asian Mining and BHP Billiton. Evan Spencer becomes non-executive director and chairman of the Technical Committee, having held senior mine management roles with Barrick Gold, Western Mining Corporation, Placer Dome among others. At close of trading yesterday, the stock was worth 73.95p, a return of 5.64% YTD and 34.45% over 12 months.

Peel Hunt yesterday downgraded Royal Mail (LON: RMG) to ‘sell’ (buy), slashing its price target to 307p (550p). On Monday, JPMorgan cut Royal Mail price target to 632p (702p), with an ‘overweight’ rating. Shares in the stock have declined steadily since June 2021, losing almost half its value in that time. Peel Hunt described Royal Mail’s future as ‘highly challenging’, as the group is under continuous cost pressures and falling revenues. The broker reduced its forecasts on the group’s domestic parcel and addressed letter volumes, and lowered its revenue outlook due to an expected fall in sales. Shares in the stock at close of trading yesterday were 313.70p, a return of -38% YTD and -42.96% over 12 months.

Analysts at JP Morgan Chase have reiterated their ‘overweight’ rating for MAN Group (LON: EMG), the investment manager. The shares at close of trading yesterday were at 243p, and JP Morgan’s target price of 300p indicates an upside of more than 23%. The analysts’ consensus this year is all positive, with Morgan Stanley also rating the stock ‘overweight’, while Citigroup and Shore Capital have a ‘buy’ rating, and Barclays last month reiterated an ‘equal weight’ rating. The shares have put in a good performance so far this year, with a return of 6.86% YTD and 39.37% over 12 months.

Canaccord Genuity has upgraded its rating on IT provider Kainos Group (LON: KNOS) to ‘buy’ (hold). Shore Capital also has a ‘buy’ rating on the stock. Shares in the stock have declined steadily since peaking on 6 November last year at 2,084p, but the full year results on Monday showed a consistency in the company’s long-term performance, recording 12 consecutive years of growth, in terms of people, customers, revenue and profitability. The company revenues of more than £300m are increasingly global, with over two-thirds of their customers in Central Europe and North America. Shares closed for trading yesterday at 1,177p, a return of -38.6% YTD and -15.14% over 12 months.


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