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The Expert View: Barclays, Anglo American and InterContinental

Our daily roundup of analyst commentary on shares, also including Reckitt Benckiser and Ashmore.

by Michelle McGagh on Feb 17, 2016 at 05:00

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Key stats
Market capitalisation£27,026m
No. of shares out16,807m
No. of shares floating16,521m
No. of common shareholdersnot stated
No. of employees132300
Trading volume (10 day avg.)66m
Turnover£17,363m
Profit before tax£-174m
Earnings per share-1.07p
Cashflow per share13.01p
Cash per share240.61p

*Correct as at 16 Feb 2016

Pain at Barclays but there will be gain

Analysts are expecting Barclays (BARC) to lose money in the fourth quarter but cost initiatives still make it a ‘buy’.

Investec analyst Ian Gordon reiterated his ‘buy’ recommendation but reduced the target price from 260p to 245p. The shares were broadly flat at 160.6p yesterday.

‘Barclays always loses money in the fourth quarter of any year, and we expect Q4 2015 to be bad enough to wipe out virtually all reported earnings from Q1 to Q3 2015, hence an uncovered dividend for a fourth successive year. Be that as it may, ahead of – we hope – a raft of cost initiatives on 1 March, on 0.5x 2017 estimated total net asset value, we reaffirm our “buy”.’

Key stats
Market capitalisation£5,788m
No. of shares out1,402m
No. of shares floating1,304m
No. of common shareholdersnot stated
No. of employees95000
Trading volume (10 day avg.)19m
Turnover18,758m USD
Profit before tax-1,741m USD
Earnings per share-1.36 USD
Cashflow per share0.58 USD
Cash per share3.35 USD

*Correct as at 16 Feb 2016

Anglo American reports ‘dire’ full year results

Falling commodity prices have reduced Anglo American (AAL) revenues and produced ‘dire’ full-year results at the miner.

Shore Capital analyst Yuen Low did not place a rating or a target price on the stock following the full-year 2015 results. The shares rose 1.2% to 397.8p yesterday.

‘Anglo American’s full year 2015 financials were dire, albeit ever so slightly ahead of both our expectations and that of consensus,’ he said.

‘Falling commodity prices meant that revenues were markedly down at $20.5 billion (2014: $27.1 billion). Despite various cost-savings initiatives and asset disposals, net debt was flat on 2014’s $12.9 billion and indeed, up on July 2015’s $11.9 billion.

‘Anglo American also put more flesh on the portfolio restructuring plan originally outlined in December 2015.

There wasn’t as much detail as we would have liked, and we would have preferred to see announcements of actual disposals rather than more disposal plans.’

Key stats
Market capitalisation£1,526m
No. of shares out707m
No. of shares floating374m
No. of common shareholdersnot stated
No. of employees285
Trading volume (10 day avg.)2m
Turnover£268m
Profit before tax£137m
Earnings per share19.32p
Cashflow per share20.51p
Cash per share82.59p

*Correct as at 16 Feb 2016

Ashmore well positioned when sentiment returns

Emerging markets investment company Ashmore (ASHM) is well positioned for when confidence in markets returns but risks remain.

Peel Hunt analyst Stuart Duncan retained his ‘buy’ recommendation but reduced the target price from 330p to 270p. The shares fell 1.4% to 210.4p yesterday.

‘We reduce our forecasts and target price to reflect the ongoing challenges from emerging market exposure,’ he said.

‘The asset class potentially offers attractive returns but investors remain unconvinced. When sentiment returns, Ashmore is well positioned. The yield remains short-term compensation, although this is not without risk given the reduced earnings expectations.’

Key stats
Market capitalisation£5,477m
No. of shares out236m
No. of shares floating220m
No. of common shareholdersnot stated
No. of employees7797
Trading volume (10 day avg.)1m
Turnover1,281m USD
Profit before tax270m USD
Earnings per share1.08 USD
Cashflow per share1.35 USD
Cash per share0.51 USD

*Correct as at 16 Feb 2016

InterContinental: special divi won’t boost shares

InterContinental Hotels (IHG) is expected to announce a special dividend but it won’t be a ‘catalyst’ for share price rises.

Numis analyst Wyn Ellis retained his ‘hold’ recommendation and reduced that target price from £26.00 to £25.00. The shares inched 5p higher to £23.04 yesterday.

‘While we expect InterContinental Hotels to announce a special dividend of c.$1 billion we do not expect the prelims to act as a catalyst for the shares,’ he said.

‘We forecast full year 2015 earnings before interest and tax of $670 million and earnings per share of $1.67 – consensus $672 million and $1.70. The shares have marginally underperformed the UK market over the last quarter but, given concerns about global economic growth and the cyclical nature of the hotel sector, we are cutting our price target from £26.00 to £25.00.’

Key stats
Market capitalisation£44,820m
No. of shares out706m
No. of shares floating637m
No. of common shareholdersnot stated
No. of employees37200
Trading volume (10 day avg.)1m
Turnover£8,836m
Profit before tax£1,663m
Earnings per share227.58p
Cashflow per share249.75p
Cash per share115.37p

*Correct as at 16 Feb 2016

Reckitt Benckiser carries momentum in 2016

Momentum has already built up for household goods giant Reckitt Benckiser (RB) this year.

Liberum analyst Robert Waldschmidt reiterated his ‘buy’ recommendation and increased the target price from £69.00 to £72.50. The shares edged 39p higher to £64.10 yesterday.

‘Reiterate “buy” and lift target price to £72.50 reflecting 5% earnings per share upgrades to 2016-18,’ he said.

‘Reckitt Benckiser carries strong momentum into 2016 underpinned by strong growth in health and emerging markets boosted by a bigger and stronger innovation pipeline. In 2016, we forecast 4.8% organic sales growth and 0.64% earnings before interest and tax margin uplift. Strong free cashflow generation provides ample scope for shareholder returns and sufficient firepower for mergers and acquisitions.

‘We now pencil in a £1 billion ongoing share buyback post 2016 reflecting Reckitt Benckiser’s desire to maintain net debt at approximately £1.6 billion.’

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  • InterContinental Hotels Group PLC (IHG.L)
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  • Anglo American PLC (AAL.L)
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  • Barclays PLC (BARC.L)
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  • Ashmore Group PLC (ASHM.L)
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  • Reckitt Benckiser Group PLC (RB.L)
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