Broker tips: NCC Group, Sabre Insurance

(Sharecast News) - Analysts at Canaccord Genuity upgraded software outfit NCC Group from 'hold' to 'buy' on Thursday, citing valuation grounds as their primary reasoning.
Canaccord said NCC's five-month trading update was "important" in two respects. Firstly, the analysts noted that the update revealed that NCC's underlying trading was ahead of the prior year on a like-for-like revenue basis and secondly, that its recent acquisition of IPM was "trading as expected" and that "integration is progressing to plan".

The Canadian bank also highlighted that, although no specific comment was made WRT year-to-date operating profits were assumed to be "in line with managements' expectations" for the 2022 trading year, with the analysts going as far as to believe that this means underlying earnings were ahead year-on-year.

However, Canaccord also pointed out the change in accounting policy, implemented at the time of the company's 2021 full-year results, and consequently, moved its forecasts to below company collated consensus for 2022.

Analysts at Berenberg modestly raised their target price on car and motors insurer Sabre Insurance from 195.0p to 205.0p on Thursday, stating its deal with motorcycle insurance outfit MCE Insurance was a good one.

Berenberg said Sabre's surprise announcement that it had struck a deal with MCE, one of the largest distributors of motorcycle insurance in the UK, to become its exclusive underwriter had been "well received" by the market.

The analysts noted that the deal was "particularly attractive" because Sabre had gained access to all of MCE's claims experience, enabling it to fast-forward its entry into the motorcycle insurance market.

As a result, Berenberg raised its earnings expectations for the stock by 6% in 2022, the principal driver for the target price increase, but stated questions regarding the group's future still remained.

The German bank, which reiterated its 'sell' rating on the stock, said the move still failed to answer its big questions - will Sabre be able to regain the policy count lost over the past four years and will its combined ratio return toward 75%? Berenberg even noted that the latter may actually be "more difficult" given that the MCE deal was written at roughly 80%.