Broker tips: Softcat, Drax, Sainsbury's, Accesso
By Iain Gilbert
Date: Friday 04 Jul 2025
(Sharecast News) - Analysts at Berenberg upgraded software firm Softcat from 'hold' to 'buy' on Friday and bumped its target price on the stock from 1,600.0p to 1,900.0p as it argued a recent sell-off had provided an attractive entry point.
Berenberg said the upgrade was on the basis of Softcat's "continued strong operational performance", as well as its "consistent ability" to beat market expectations and the 15% selloff in its shares over the past two weeks.
The German bank said its view on the company has always been positive. However, it also noted that Softcat's shares now looked "more attractively valued" than at the time of its re-initiation in October 2024, when it traded on a 26.6x one-year forward price-to-earnings ratio and a 3.4% free cash flow yield, relative to our expectation of a 7% FY23/26 earnings per share compound annual growth rate. Today, Berenberg said, Softcat trades on a 22.6x FY26 price-to-earnings relative and a 4.0% free cash flow yield, relative to our expectation of a 10% FY24/26 earnings per share compound annual growth rate.
"In our view, Softcat is the most resilient UK VAR and the one with the best chance of upgrading expectations over the medium term, as it continues to navigate the challenging macroeconomic environment of the past several years admirably," said Berenberg,
JPMorgan Cazenove resumed coverage of Drax on Friday with an 'overweight' rating and 1,000.0p price target after a period of restriction.
The bank said its analysis continues to support its view that the company was "well positioned to create value as intermittency increases in the UK power grid". Furthermore, JPM said it expects Drax to continue to be disciplined on capital allocation.
"We expect a £200m extension of the share buyback to be announced at interim results on July 31st, and we place Drax on positive catalyst watch," it said.
Analysts at RBC Capital Markets nudged up their target price on supermarket chain Sainsbury's from 300.0p to 305.0p on Friday after hosting an investor call with the group a day earlier.
RBC Capital Markets said it had come away from Thursday's investor call "encouraged" by Sainsbury's momentum, particularly in food, noting that the company's food-focused approach was "seeing traction with consumers", and that it expects continued momentum to be supported by ongoing innovation and also by a reallocation of general merchandise space to good.
The Canadian bank also said Sainsbury's valuation looks undemanding relative to key peers, leading it to reiterate its 'outperform' rating on the stock.
"Following SBRY's Q1 trading update earlier this week, we have nudged up our FY26-27 EPS forecasts. Our PT moves to 305p from 300p. SBRY is currently trading at c.13x CY25e P/E, a little ahead of ts historic average but at a wider than average discount to TSCO (c.2x vs c.1x historically), despite a similar MSD % CY24-27 EPS CAGR and a higher all-in yield this year (>10%), from a combination of ordinary dividends, special dividends and a share buyback," added RBC.
Peel Hunt downgraded ticketing and point of sale specialist Accesso Technology on Friday to 'hold' from 'buy' as it pointed to falling foot traffic.
Peel Hunt noted that foot traffic at theme parks appeared to be down amid recent stifling weather, with data from Placer.ai showing that Six Flags' foot traffic was down 17% in the 30 days to 20 June, the worst performance since its Q1 earnings in May.
"As Accesso's largest client, this does not bode well for its highly operationally geared volume-based model," Peel Hunt said, as it cut EBITDA estimates by 10%.
Peel Hunt also noted that Accesso's share price had appreciated 6% since February, when it saw further upside potential given the company's cautious guidance.
"However, the hot weather has changed ACSO's outlook. Our EBITDA downgrade leads us to cut our TP by the same proportion to 540.0p, and our rating from buy to 'hold'," said Peel Hunt.
Reporting by Iain Gilbert at Sharecast.com
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