Broker tips: Chesnara, Applied Nutrition, Softcat, Bytes Technology

(Sharecast News) - Analysts at Berenberg lifted their price target on Chesnara to 437p from 404p, citing rising momentum for further dealmaking and a strongerthanexpected capital position.

Berenberg said three elements of Chesnara's firsthalf update pointed to an active M&A pipeline heading into 2027 - the smooth integration of HSBC Life UK with no operational or regulatory issues, a 185% solvency ratio, and a buoyant acquisition landscape across the UK, Germany, Sweden and Belgium.

The German bank stated management was likely to raise its targets for the HSBC Life UK deal at the fullyear stage, with the company reiterating expected benefits of more than £140m in cash remittances over five years and over £800m across the life of the acquisition. HSBC Life UK generated £51m of operating capital in H1, including oneoff merger benefits, with £20m upstreamed as cash.

Chesnara also delivered strong organic capital generation of £96m, well ahead of Berenberg's forecast due to the oneoff merger benefit, while cash upstreaming of £73m beat expectations thanks to a £30m contribution from the Netherlands. Solvency again surprised to the upside at 185%, though adjusted operating profit was slightly weaker due to higher lapses in Sweden.

Berenberg estimates around £280m of potential M&A capacity, comprising roughly £130m of excess cash and £150m of debt headroom, and said the success of the HSBC Life UK rights issue suggested strong investor appetite for any future equity raise.

As a result, Berenberg raised its target price to 437p, arguing that additional equity funding for deals could support dividend growth of around 6%, compared with Chesnara's usual 3% pace.

Canaccord Genuity lifted its target price on Applied Nutrition from 335p to 365p on Wednesday, citing another strong upgrade cycle and a stepup in FY27 guidance.

Canaccord Genuity said Applied Nutrition's FY26 trading update delivered a clear beat, with revenue up 50% yearonyear to £160m, around 8% ahead of consensus, and adjusted underlying earnings rising 40% to £43.3m, slightly above market expectations.

Momentum remained broadbased across markets and channels, while the recent Nutrablend acquisition was described as strategically important for the firm's longterm North American ambitions, with integration progressing to plan.

Looking ahead, Applied Nutrition raised FY27 revenue guidance to £205m, up 28% year-on-year, while underlying earnings were seen 13% higher at £49m, both ahead of consensus.

Canaccord noted margins were expected to moderate slightly due to a greater contribution from the lowermargin US business, higher whey costs and a larger mix of wheybased products following a successful relaunch of Critical Whey.

The Canadian bank increased its FY26/27 revenue forecasts by 8% and 11%, respectively, while EBITDA expectations were raised by 3% and 2%, respectively, marking APN's fourth upgrade to FY26 expectations this year. On updated numbers, Canaccord said APN trades on 23.5x FY27E earnings, falling to 21.3x FY28E, and 15.9x FY27E EV/EBITDA, falling to 13.9x FY28E.

Canaccord also reiterated its 'buy' stance on the stock, highlighting APN's superior growth profile, strong margins and significant global expansion opportunities.

Deutsche Bank downgraded Softcat but upgraded Bytes Technology on Wednesday as it took a look at the UK software and IT services sector.

DB noted that the sector has performed strongly in the last three months and is now slightly above where it was at the start of the year and around 42% above the low it hit in late March.

"Whilst a lot of this performance was accounted for by Computacenter, Softcat and Kainos which had upgrades, there has also been improved investor sentiment more recently, reflecting the swinging perception of the risk posed by AI on what are seen as traditional business models for Software and IT services," it said.

The bank cut Softcat to 'hold' from 'buy' but lifted its price target to 2,140p from 1,800p, while it upgraded Bytes to 'buy' from 'hold' and increased its price target to 500p from 410p.