Broker tips: Anpario, Softcat, Superdry

Analysts at Canaccord Genuity slashed their target price on animal feed manufacturer Anpario from 800.0p to 580.0p on Tuesday following an "unusually challenging" trading year.

Canaccord Genuity said historically, Anpario had been able to cope with a number of issues well, mainly thanks to a number of preventative and adjusting measures - including the build-up of a large stock of raw materials when times were favourable.

However, the Canadian bank stated that 2022 had been particularly tough and increased commodity prices and freight costs had affected the group's profitability.

"In H2-2022 in particular, Anpario experienced issues in China related to difficulties in obtaining import permits which delayed the materialisation of some revenue. Most likely in a more limited way, long travel restrictions in China also affected order volumes," said Canaccord, which stood by its 'buy' rating on the stock.

"Despite orders in Asia being impacted, major negative effects were balanced by growth in other geographies that have been promising and are starting to deliver results."

IT infrastructure and services provider Softcat was under the cosh on Tuesday after UBS downgraded its shares to 'sell' from 'neutral' and cut its price target on the stock to 1,070.0p from 1,220.0p.

UBS said the UK's weaker economic outlook within Europe and its high SME exposure present enhanced insolvency risks and while the shares fell 34% in 2022 the European reseller peer group fell 37% in GBP terms, so it has not underperformed.

"Softcat also faces a higher cost base due to the return of T&E expenses and higher personnel costs," it said.

UBS stated that with services representing only 13% of gross invoiced income, it now sees additional long-term risks to margins from a shift to the cloud and the rise of cloud-based marketplaces where customers can directly procure software.

"The combination of the macro uncertainty, high SME exposure with continued pressure on margins provides an unattractive risk/reward in our view, and we see risks of guidance cuts," UBS concluded.

RBC Capital Markets downgraded Superdry to 'sector perform' from 'outperform' on Tuesday, saying the shares were now "more fairly valued".

The Canadian bank said Superdry had made a good start to its turnaround strategy, with a better product offering and improving social media metrics, but noted that improvements were coming through more slowly than anticipated.

"We believe that there is still work to be done, particularly in the wholesale business and the digital platform," RBC said.

"We note a strong run in the shares over the last three months (up circa 50%) and valuation, at circa.12x CY23e price-to-earnings, looks fair in our view," it added, hence the downgrade.

RBC also maintained its 'speculative risk' rating on the stock and lifted its price target to 160.0p from 155.0p.