The shares of WPP, Paragon Banking, and CRH rose on Thursday after receiving positive ratings from various brokers. The three companies are among the top performers in their respective sectors, benefiting from strong fundamentals and growth prospects.
WPP wins new contracts and boosts margins
WPP, the world’s largest advertising group, saw its share price increase by 3.6% to 1,010p after Barclays upgraded its rating from equal weight to overweight and raised its target price from 1,050p to 1,200p. The broker said that WPP has improved its competitive position and profitability by winning new contracts and expanding its margins.
Barclays also praised WPP’s strategy of simplifying its structure, investing in technology, and focusing on sustainability. The broker expects WPP to deliver organic revenue growth of 5.5% in 2023, above the industry average of 4.5%. It also forecasts a margin expansion of 120 basis points, reaching 15.5% by 2025.
Paragon Banking benefits from specialist lending
Paragon Banking, a specialist lender and savings provider, gained 2.4% to 593p after RBC Capital Markets raised its target price from 560p to 600p and reiterated its outperform rating. The broker said that Paragon’s first-half results, which showed a 41% increase in underlying profit and a 17% rise in lending volumes, were impressive and demonstrated its resilience and diversification.
RBC also highlighted Paragon’s strong capital position, with a CET1 ratio of 16.4%, and its attractive dividend policy, with a payout ratio of 40%. The broker said that Paragon has a competitive advantage in the specialist lending segments, such as buy-to-let, commercial, and development finance, where it can offer tailored solutions and higher margins.
CRH benefits from infrastructure spending
CRH, a leading building materials group, advanced 1.9% to 3,736p after Jefferies upgraded its rating from hold to buy and lifted its target price from 3,450p to 4,100p. The broker said that CRH is well-positioned to benefit from the increased infrastructure spending in the US and Europe, as well as the recovery in residential and non-residential construction.
Jefferies also noted that CRH has a strong balance sheet, with a net debt to EBITDA ratio of 1.1x, and a disciplined capital allocation strategy, with a focus on value-accretive acquisitions and disposals. The broker expects CRH to generate free cash flow of €3.4bn in 2023, representing a yield of 7.4%.
