View the article online at http://citywire.co.uk/money/article/a572145
Expert View: Panmure cuts IMI to 'hold'
Analyst views on IMI, Intertek and Foreign & Colonial investment trust.
Panmure cuts IMI to 'hold'
Panmure Gordon has downgraded shares in IMI (IMI.L), the engineer and Citywire Top Stocks® constituent, to ‘hold’ from ‘buy’. Analyst Oliver Wynne-James was left uninspired by the stock’s prospects after its recent strong run and the full-year results on Friday. These showed a better-than-expected increase in 2011 profits from the maker of power generation equipment and valves for drinks dispensers. Chief executive Martin Lamb forecast organic growth of 3-4% for this year but said this would be ‘supplemented’ by acquisitions.
Wynne James said: ‘Investors in this sector like to chase growth but IMI's 2012E prospects are forecast to be sluggish and it may have to work hard to preserve the hard-fought gains achieved since 2009.’ Although he raised the target price from £10.20 to £10.80 he cut his recommendation to ‘hold’, saying: IMI is a value stock in our view and can be re-assessed at lower share price levels.’
IMI shares closed nearly 2%, or 20p, lower at 971p.
Intertek pleases Seymour Pierce
Shares in Intertek (ITRK.L) raced 5%, or £1.10 higher, to £24.24, after the British testing firm yesterday pleased the market with a 23% rise in full-year profits. The company, which tests products from toys and clothes to oil and renewable technology, said it made adjusted pre-tax profits of £260.1 million in 2011, above consensus analyst forecasts of £249 million.
Kevin Lapwood of Seymour Pierce said: ‘This was the highest reported levels of growth in the [support services] sector so far this year and was due to the strength of global commodities markets.’ He said Interek benefited from the defensive qualities of its business model and favourable long-term trends and a broad spread of activities. With the shares trading at 18.4 times forecast 2012 earnings, he retained an ‘add’ recommendation on the stock.
Foreign & Colonial not special enough for Numis
Numis viewed the full-year results from Foreign & Colonial investment trust as ‘solid rather than exceptional’. The portfolio of the £2.9 billion global investment company fell 4.8% last year, slightly less than its benchmark. The main contributor to performance was the private equity holdings in Pantheon and HarbourVest funds. Total cash distributions from private equity investments more than doubled to £67 million. Overall revenue grew 20.1% helped by the resumption of BP dividends. A final dividend took the total for the year to 7.1p, an increase of 5.2%.
Numis said: ‘it is a low cost way to gain global equity exposure with a TER [total expense ratio] of 0.56% of average net assets. It is differentiated from its peers by the private equity portfolio which enhanced returns in 2010/2011. The fund’s performance record has improved after a difficult period during 2008/09, but it remains solid rather than exceptional. Since the year end the NAV total return is up 8.7% in 2012 year to date, which is broadly in line with the benchmark.’
The Citywire guide to investment trusts
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by Gavin Lumsden on Mar 07, 2014 at 18:53