Broker tips: Frasers Group, Currys, James Fisher, Shaftesbury Capital

(Sharecast News) - RBC Capital Markets downgraded Frasers Group on Tuesday to 'underperform' from 'sector perform' as it said the risk/reward scenario was less favourable.

The Canadian bank noted that the share price has risen 12% year-to-date, likely due to improved sentiment on the sector and as the company has taken the opportunity to buy back its shares at depressed levels.

"The shares have now run slightly ahead of our fair value and we see more upside in several other stocks, hence we have moved our rating to underperform," said RBC, which lifted the price target to 750p from 720p.

RBC said the potential acquisition of Hugo Boss was slightly accretive, but noted that turnaround visibility was low. It estimates that an acquisition at �38 per share would be accretive, with return on capital employed just above Frasers' cost of capital.

It also noted that Frasers has followed up with a nil-premium takeover offer for Australia's Accent Group, which its team expects to be rejected.

RBC added that international sales represent around 30% of group sales for Frasers and said this provides the company with a longer term growth opportunity, for example by returning XXL in the Nordics to profitability and scaling up Holdsport in southern Africa.

"We think this expansion provides an attractive longer term opportunity for growth, albeit we point out Frasers' mixed track record internationally, given the challenges of localisation, and having the right infrastructure to support the business," it said.

RBC Capital Markets also upgraded Currys to 'outperform' from 'sector perform' on Tuesday and lifted its price target on the stock to 180p from 165p as it pointed to an attractive valuation and the potential for further share gains.

RBC said Currys was transitioning from being a recovery play to a likely multiyear compounder with strong cash returns and noted that in the UK & Ireland, Currys has seen continued good trading with clear market share gains. In the past year it has seen strong sales in mobile alongside growth in computing and appliances, helped by its strong omnichannel proposition, including order & collect sales, the bank said.

The bank said like-for-like sales growth and a stable gross margin have more than offset cost headwinds. In the Nordics, Currys has a dominant number one position in each market, RBC said.

RBC also pointed out that Currys was trading at 10.5x CY26 estimated price-to-earnings and has a 2% dividend yield, which it considers to be reasonable, given its stronger recent execution and balance sheet, with the main risks being macro related.

Analysts at Berenberg lifted their target price on James Fisher from 790p to 850p on Tuesday after attending the group's capital markets day earlier in June, saying it came away "very encouraged" about the growth prospects for its defence division.

Berenberg said the event highlighted James Fisher's differentiated technologies, strong market positions and growing confidence among senior management, with orderintake momentum expected to build over the next 12-18 months. Forecasts for FY26-FY28 were left unchanged, while FY29 estimates were introduced.

The German bank said James Fisher's defence unit offers "significant" growth opportunities, particularly in Tactical Delivery Vehicles and its new Stealth Multirole rebreather, which together represent a serviceable obtainable market of around �3.2bn, compared with FY25 revenue of �100m. TDVs currently face no direct competition, and Berenberg said a bluesky scenario for these two products alone could present 100% upside to its FY29 adjusted underlying earnings forecast of �50m.

Berenberg also sees further margin upside within the defence unit, noting the division's high operational leverage and a growing base of recurring, highermargin service revenue from commercial diving and rescuesubmarine contracts. Its new FY29 EBITAmargin estimate stands at 11.5%, but the broker believes midteens margins to be achievable over the medium term - above the company's current 10% target.

At group level, Berenberg said all three divisions now have clear plans to lift margins into the midtohighteens, while central costs have stabilised at 3.5% to 4% of revenue following recent investment in personnel. As a result, it views the group's 10% adjustedEBITA margin target as "very achievable" and likely to be met ahead of FY28.

Berenberg, which reiterated its 'buy' rating on the stock, added that James Fisher's valuation remains "compelling", with the shares trading on 19x CY26 earnings, falling to 15x in CY27, and a CY27 enterprise value to EBITDA multiple of 5.1x. With a doubledigit freecashflow yield and scope for dividend payments to resume, Berenberg said the stock offers around 70% upside to its new target.

Citi reiterated its 'buy' rating on Shaftesbury Capital on Tuesday, driven by historically opportunistic valuation levels and significant rental income support to earnings per share and net asset value.

It also cited the potential for upside risk to estimates from asset recycling external growth opportunity.

"Despite recent market volatility, we anticipate substantial EPS and NAV growth over the next five years significantly ahead of consensus, fuelled by strong reversion conversion and rising market rents in London's West End," the bank said.

"We believe the current share price dislocation presents an attractive buying opportunity given the positive growth already being delivered, estimated to continue and intensify, should trigger a narrowing of the stock discount and eventually a premium to growing private market valuations."