Broker tips: Everplay, Volex, Close Brothers

(Sharecast News) - Analysts at Berenberg lowered their target price on video games developer Everplay from 450p to 370p on Thursday amid investor concerns regarding higher-than-expected capital expenditure in FY26 and the year's "significant H2 weighting".

Berenberg noted Everplay shares have declined 10% following its FY25 results on 24 March and were down 38% over the last six months due to capex spend, the perceived threat posed by AI threat and several titles missing expectations.

The German bank said Everplay shares now trade on a FY26 price-to-earnings ratio of 8.4x and an free cashflow yield of 7.5% and highlighted that the stock has only traded at this valuation level twice before - following its 2023 downgrade from impairments and at the end of 2024 ahead of expectations of a miss in 2025.

"The strong pipeline with an own-IP focus leaves upside risk to forecasts, in our view," said Berenberg. "We forecast revenue growth of 7% in FY26, but this compares to underlying revenue growth of 5% in FY25, despite the stronger pipeline. Any outperformance of own-IP titles will lead to margin upside as incremental revenue will offset amortisation and lower royalties as percentage of revenues."

Over at Canaccord Genuity, analysts hiked their target price on power products supplier Volex from 445p to 500p on Thursday, stating the firm's latest update highlighted "a strong step-up" in data centre activity, which it noted continued to be "the main driver" behind another high-single-digit upgrade to forecasts.

Canaccord Genuity said this momentum was also helping operating margins push up to more than 10%, above Volex's previous 9-10% target range, and was setting the tone for what could be "a more sustained margin progression story" ahead of its capital markets day on 22 April, where new medium-term ambitions will be laid out.

The Canadian bank said its 8% upgrade to FY26 adjusted operating profits and 9% to adjusted earnings per share had carried into the outer years, lifting FY27-28 adjusted EPS by around 6% each year.

Canaccord also noted that the potential shift from AIM to the Main Market added "another sign of the group's growing ambitions", though if it does proceed, the analysts noted that investors should expect "some short-term share price volatility".

"Volex has seen a healthy upgrade-driven rerating and now trades on 14.9x CY26E P/E and 8.9x EV/EBITDA, still below sector averages (18x P/E, 10x EV/EBITDA) given peers' higher underlying margins (~14%)," said Canaccord, which reitetrated its 'hold' rating on the stock.

"We increase our target price to 500p (from 445p) based on a forward P/E multiple of 16x (from 15x). A sustained move to higher margins could support further a rerating toward the peer group, in our view."

UBS upgraded Close Brothers on Thursday to 'buy' from 'neutral' as it pointed to a favourable risk/reward.

The Swiss bank noted that the stock price has recently been impacted by concerns about further motor redress costs, adding to the slow to recover loan book, decline in income and profits, and higher restructuring charges.

"We think current valuations do not adequately reflect the recovery in return on tangible equity that we forecast (to a sustainable circa 9%), driven by business restructuring and cost savings efforts, and embed a higher risk of motor provision increases than we think is likely," UBS said. "Our motor redress assumption is in line with the firm's current provision of �300m, fits well with the firm's lending share, and our CET1 forecasts leave room for absorption of some further charges if needed."

UBS pointed out the shares are trading at a discount to historical averages and sector multiples, partly explained by relative financial performance but it thinks overdone. UBS added that its unchanged 555p price target implies more than 40% upside.