Broker tips: TT Electronics, Lloyd's insurers, Made.com

(Sharecast News) - Berenberg sounded an upbeat note on TT Electronics, pointing to solid sales growth as evidence that the company's shift towards secular growth markets over the preceding years was now bearing fruit.


"Most encouraging" was that expected 2021 sales were no fully covered by the order book, together with "good visibility" of 25.0-30.0% on 2021.

"As a result, it is perhaps unsurprising that TT's management team noted that the business opportunity pipeline is as buoyant as they have ever seen it."

They also argued that the company's margins were also trending towards record highs of 10.0%-plus alongside and free cash generation was poised to inflect.

One-off start up costs for Virolens had subtracted 130 basis points from TT's operating margins for the first half of 2021, they added.

Self-help savings of £3.0m were also still to be had and some price increases had still to go through in the second half.

That was on top of the benefits that were yet to come of the company's increased operational gearing.

Berenberg also pointed out that its free cash flow estimates could prove "conservative" if a buyout of TT's fully-funded pensions materialised in the next couple of year.

The analysts also raised their target price on the shares from 290.0p to 320.0p.



Analysts at JP Morgan reiterated their 'overweight' stance for shares of Beazley and Hiscox, telling clients that the outlook for all three Lloyd's insurers, which also includes Lancashire Holdings, was better than previously guided towards.

That, they argued, should drive a resumption of dividend payouts.

"Looking ahead, we believe that the outlook on growth and pricing momentum are the key re-rating drivers for the sub-sector, which are both tracking well, followed by resumption of dividends at full year results. Within the Lloyd's sub-sector, we prefer Beazley (OW) and Hiscox (OW)."

The positive momentum seen at the insurers over the first half of the year was expected to extend into the back half of 2021, on top of the ongoing growth in premiums.

Indeed, the insurers had suggested that pricing improvements might stretch into 2022 - a key positive for the sub-sector.

In the case of Hiscox specifically, JP Morgan believed the recovery might prove faster, allowing its Retail unit to hit its combined operating ratio target a year earlier.

JP Morgan also lifted its target price for Hiscox from 1,016.0p to 1,155.0p and that for 'neutral' rated Lancashire Holdings from 613.0p to 662.0p.



Analysts at Liberum initiated their coverage of online furniture retailer Made.com at 'buy', highlighting to clients the company's multiple attractions and disruptive business model.

For starters, they held that the firm was disrupting a £94.0bn market that was on the cusp of online adoption.

Its vertically-integrated model also had "strong" competitive moats, including its focus on design and proprietary technology.

"MADE is about curation and inspiration and its design-led focus differentiates it from the wider market," they said.

"Operating a just-in time inventory model that, backed by MADE's proprietary technology, de-risks the model while maximising working capital and marketing efficiency underpins an attractive financial profile."

Among some of the other strategic planks that the analysts should drive a re-rating of the shares was the expansion of its homeware range and rollout of its high-margin curated marketplace.

Liberum set a target price of 250.0p for an estimated 2022 EV/sales valuation multiple of 1.7.