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Anglo American (AAL) has reported better-than-expected first-half results but Jefferies analysts are unsure this positive momentum can continue throughout the rest of the year. Analyst Christopher LeFemina retained a ‘hold’ rating and a target price of £17.00, noting that while operational improvements were ‘encouraging…significant challenges remain’. Shares are currently trading at £16.33. ‘Anglo American reported better than expected results for the first half of 2014. The beat can mostly be attributed to very good results at [diamond mining company] DeBeers and [Chilean mine] Collahuasi,’ he said.
Mothercare (MTC) after two previous bids were rejected. Liberum analysts retained a ‘sell’ rating and target price of 160p on the shares after the Destination Maternity announcement. Shares fell 7.8% to 238p yesterday on the news. Analysts said it withdrew ‘as a result of resistance from Mothercare shareholders who saw the 300p offer as undervaluing the company, and Mothercare unwilling to open its books in any case’. Mothercare has also been hit by the announcement that its financial director Matt Smith is leaving for Debenhams. ‘This leaves Mothercare with a high calibre, newly appointed chief executive, Mark Newton Jones and investors with little more than hope at this stage to support the share price.’
Great Portland Estates (GPOR) show it is benefitting from limited supply and strong demand in the property market. Peel Hunt analyst James Carswell retained a ‘buy’ rating and a target price of 720p on the shares, which are currently trading at 643.5p. ‘Great Portland is significantly increasing its development programme into a market of very limited supply and strong demand – illustrated [in its] reducing vacancy, increasing rents and lettings above estimated rental values,’ he said. ‘The West End is also continuing to see yield compression and this will push net asset value growth beyond our forecast – with the shares trading on a small net asset value discount, we remain buyers.’
Cranswick (CWK) has been downgraded after like-for-like sales were down on last year but the company is still reporting ‘excellent’ results. Numis analyst Charles Pick reduced his recommendation from ‘add’ to ‘hold’ but retained a target price of £13.26 on the shares, which are currently trading at £12.60. ‘Key first quarter features are: like-for-like sales of +5%, below the exceptionally good level seen last full year of +12% when some major new contracts featured but still excellent margins similar to first quarter of last full year,’ he said. Pick said the main risk to Cranswick was the grocery price war impacting on suppliers ‘although post last year’s horse meat issues these have been more respectful of supporting British suppliers with shorter supply chains and better traceability’.
Hargreaves Lansdown (HL) shares has created a buying opportunity in the online stockbroker. Barclays analyst Daniel Garrod has retained his ‘overweight’ rating but lowered the target price from £15.50 to £14.90 ‘to reflect earnings per share cuts’. Shares are currently trading at £10.47. ‘Following strong outperformance in 2013, the Hargreaves Lansdown share has significantly underperformed in 2014 (-21% year to date vs FTSE 100 +1%),’ he said. ‘In part this reflects downward earnings per share revisions, due to lower yield on client cash, but in part reflects concerns around increased competition and downward pressure on revenue margins. ‘We believe that direct fees will lower gradually over time but are manageable. The reason why we continue to rate the stock “overweight” is we believe it is a strong beneficiary of the retail distribution review boosting client numbers and flows.’ He added that the platform would see increased flows in the rest of the year thanks to raised ISA limits and the Neil Woodford fund launch.
Aviva, RSA and Partnership face watershed moment, say analysts Panmure Gordon have warned that three big insurers face a “watershed moment” following a turbulent six months for the sector. In a release ahead of the insurance industry’s results season, the group warned that the strengthening of sterling and the chancellor’s overhaul of the annuities industry in the Budget this year would have an impact on profit. “The sector has had an ‘interesting’ H1 2014 with the bombshell dropped by George Osborne in his March Budget probably being the stand out event,” Panmure said. It issued a positive rating for life-insurance but a negative for non-life, citing the over-capitalisation and low rates in the sector as factors. The analysts posted “buy” recommendations for both Aviva and Partnership Assurance and a “hold” recommendation for RSA. All three faced a watershed moment, it added.
Analyst Views: How did you rate Aberdeen’s latest set of results? HALEY TAM | CITI Fund flows were worse than anticipated from the Swip post-deal, and a one-off institutional equity outflow, which while previously flagged was bigger in scale than expected. Aberdeen has indicated that Swip attrition is partly seasonal. We see share price weakness as an opportunity to buy. PETER LENARDOS | RBC CAPITAL MARKET A messy quarter three interim management statement, but flows are stabilising, investment performance is improving and the revenue yield is holding up. We see little change to forecasts as a result. JUSTIN BATES | LIBERUM Aberdeen has proved itself to be one of the best performing, operationally, asset managers in the sector in the last five years. Short-term sentiment today will likely be overshadowed by the single £4bn withdrawal from a client, who remains an existing customer.
Domino’s Pizza (DOM) with a first-half update. Analysts’ expectations: There may be room for positive numbers, thanks to a strong first quarter and that people preferred to watch the World Cup at home, say analysts from Peel Hunt. “We are looking for a c10% improvement in UK EBIT [earnings before interest and taxes] to around £28.5 million. The extraction from owned stores in Germany has been painful and we expect a similar first-half loss (£3.2 million) to last year.” Overall Peel Hunt’s estimate for first-half pre-tax profit is £25 million versus £22.2 million last time. “The shares have been range bound (c500-560p) during 2014 and interim results may push the shares to the top end of this – presenting a potential trading opportunity,” they add.
APR Energy (APR) with the release of its pre-close update, but Peel Hunt’s Andrew Nussey expects it to be brief. Analysts expectations: First-half revenues are expected to reach $248 million (£146 million) and earnings before interest, tax and amortisation (EBITA) should benefit from a one off $8 million thanks to its Australian contract. “Overall, we expect little change to guidance at this stage, with the investor focus likely to be more on the forthcoming interims, where we may get an update on the Libya renewals and the search for a chief financial officer,” says Nussey, rating the stock ‘hold’ at its target price of 500p.
Joe Brent, analyst at Liberum, said the dteail in the announcement of the merger talks was “deliberately vague”, but that it was most likely that the structure of the deal would entail Carillion buying Balfour Beatty. Following an analysts briefing from Carillion’s senior management, Kevin Cammack, analyst at Cenkos, said: “The whole tone to me made it patently obvious that in Carillion eyes this is not a merger at all but an opportunistic take over of Balfour Beatty”.
CNBC VIDEO Chinese brides and Indian festivals will drive diamond demand into new year, the CEO of De Beers told CNBC, as the market for the precious jewel continues to rebound.
Outsourcery PLC , FT Edison “Thanks for the fee. Here’s your note. It says you need to raise £5m.”probably best avoid for the moment.
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