Broker tips: The Gym Group, Moneysupermarket

(Sharecast News) - Analyst at Berenberg raised their target price on gym operator the Gym Group from 230.0p to 290.0p on Tuesday, stating "encouraging momentum" was now emerging.

Berenberg said it was "highly encouraged" by the recovery in membership reported in the company's interim results, as well as the "significant opportunities" that it was now seeing to grow its gym estate.

The German bank thinks the bounce-back in membership demonstrates that demand for gyms had not gone away - and it expects membership to have built further during September, as students returned to university, workers began returning to offices and "normal habits" started to re-form.

Berenberg, which reiterated its 'hold' rating on the stock, then said the Covid-19 pandemic had "accelerated the demise of certain challenged businesses", particularly "weaker store-based retailers", which has created more new site opportunities for the firm than usual.

With the benefit of having also raised equity in July, the analysts noted that the Gym Group now expects to open 40 sites between mid-2021 and the end of 2022, an increase on its pace of openings prior to the pandemic.

Credit Suisse has downgraded earnings forecasts for 'neutral'-rated Moneysupermarket after soaring wholesale gas prices brought the switching market to a temporary halt.

The bank, which also cut its target price for the price comparison website to 250.0p from 290.0p, said gas and power prices were "at extremes".

It continued: "Gas and power curves are in backwardation, leaving the standard variable tariff now significantly cheaper than fixed deals. This has meant that consumers ending fixed terms would be rational to default onto the SVT rather than switching to a new fixed term. As such, the switching market has effectively ceased, in our view."

As a result, Credit Suisse has reduced its 2021 full-year estimates for adjusted earnings before interest, tax, depreciation and amortisation by 7.6% to £95.5m compared to the consensus for £97.8m. It has also reduced forecast revenues for the year by 3%.

Catalysts include a fall in wholesale energy process, new product launches by financial institutions and a new management strategy, Credit Suisse argued. Risks include regulation, rising energy prices and further uncertainty which in turn would affect bank product launches.