Broker tips: 888 Holdings, Quilter, ITM Power

Analysts at Berenberg slashed their target price on bookmaker 888 Holdings from 320.0p to 220.0p on Tuesday, stating interest costs remained "a burden".

Berenberg said 888 Holdings underwent "a difficult year" in 2022, weighed down by weakness in the UK, heightened interest rate costs, and high leverage following the completion of its William Hill acquisition.

The German bank highlighted that interest costs continued to weigh on the group, and with deleveraging ranking among management's main priorities, said 888 faces "an opportunity cost of potential growth" while refocusing itself on fewer markets.

The equity story revolves around the execution of deleveraging, with the current pro-forma leverage of 5.5x targeted to decline below 3.5x by FY25," said Berenberg, which reiterated its 'buy' rating on the stock.

"Despite the impending departure of the CFO Yariv Dafna, at the current valuation (6x our FY23 EBITDA estimate) the risk-reward is favourable in our view."

JPMorgan Cazenove downgraded Quilter on Tuesday to 'underweight' from 'neutral' and cut the price target to 74.0p from 83.0p, placing the stock on 'negative catalyst watch'.

"We expect negative flow momentum to continue in 1H23; the outlook remains uncertain and IFAs continue to consolidate flows on fewer platforms," JPM said.

"We also place Quilter on 'negative catalyst watch' as we are 8% below consensus on 2023 earnings per share, driven by higher expected costs, as we believe that the largest proportion of the cost savings targeted (£45m by 2024) will be back-end loaded."

In addition to this, JPM argued that the valuation seems excessive, trading at 17.3x estimated 2023 earnings per share.

Analysts at RBC Capital Markets slashed their target price for shares of energy storage and clean fuel company ITM Power from 500.0p to 260.0p on Tuesday.

In particular, RBC pointed to its new delivery assumptions to back up the move and also noted that following the recent appointment of Dennis Schulz as chief executive officer, "near and longer-term capacity expansion plans and commercial credibility" were now "top agenda items for the executive".

Nonetheless, given the recent "significant" de-rating in the shares relative to peers, together with the potential for a pick up in orders in 2023, RBC chose to stick to its 'outperform' recommendation for the shares.