Broker tips: Kistos, Dowlais, Whitbread

Analysts at Berenberg raised their target price on closed-ended investment company Kistos from 600.0p to 630.0p on Wednesday, stating its deal with Mime Petroleum was "more than just hand waving".

Berenberg said Kistos' acquisition of Mime Petroleum had given it a stake in the Balder, Ringhorne, and Ringhorne Øst fields, offshore Norway - adding 24.0m barrels of oil equivalent of proven-plus-probable reserves and a further 30.0m mboe of contingent resources.

Overall, the German bank views the deal as accretive to Kistos and a further demonstration of the company's ability to creatively structure deals and grow the business.

"We incorporate the new assets, mark-to-market our H1 commodity prices, roll forward our NAV and make various other modelling changes – the net effect is a 5% increase in our price target to 630.0p," said Berenberg, which also reiterated its 'buy' rating on the stock.

"On our updated forecasts, Kistos is now trading on FY 2023/24 EV/EBITDA of 1.7x/2.0x, EV/DACF of 2.6x/2.3x and a FCF yield (pre-M&A) of -10%/2% respectively."

RBC Capital Markets initiated coverage of Dowlais on Wednesday with an 'outperform' rating and a "potentially conservative" sum-of-the-parts based 180.0p price target.

"We see Dowlais (the Melrose automotive spin-off) as a net winner in the EV transition, positioned to outgrow the underlying auto markets and significantly expand operating margins," RBC said.

The Canadian bank added that the company was underpinned by a "dominant position" in sideshafts, which alone can account for roughly 90% of its market cap today despite only being half of the group sales - such that the other approximately 50% of sales appear "nearly free".

Analysts at Deutsche Bank hiked their target price on Premier Inn owner Whitbread from 3,530.0p to 3,780.0p on Wednesday after the group's full-year results came in ahead of expectations.

Whitbread posted pre-tax profits of £413.0m, up 6% versus consensus of £389.0m, while cash generation was said to have remained "solid", with cashflow from operating activities of £800.0m - up from £509.0m on a year ago.

Deutsche Bank pointed out that this meant that even after a high capex of £546.0m, Whitbread was able to declare dividends of 74.2p for the year and announce a £300.0m buyback to be completed by the end of the first half of 2024.

"Shares reacted positively, up 4.25% yesterday, versus a slightly negative Stoxx 600 (-0.4%)," add DB, which reiterated its 'buy' rating on the stock.