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The Expert View: Bovis, Go-Ahead and Ashmore

Our daily roundup of analyst commentary on shares, also including ZPG and McBride.

by Michelle McGagh on Sep 08, 2017 at 05:00

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Key stats
Market capitalisation£1,548m
No. of shares out135m
No. of shares floating132m
No. of common shareholdersnot stated
No. of employees1186
Trading volume (10 day avg.)1m
Turnover£1,055m
Profit before tax£121m
Earnings per share89.97p
Cashflow per share91.66p
Cash per share28.66p

Bovis Homes surges on turnaround strategy

The prospect of bumper payouts was enough to help investors look beyond a fall in profits at Bovis Homes (BVS), as chief executive Greg Fitzgerald outlined his turnaround strategy.

Shares in Bovis jumped 8.5% to £11.41 yesterday, as Fitzgerald said he was making good progress and operational issues were ‘very fixable’.

‘The new strategy seems sensible enough,’ said Hargreaves Lansdown analyst George Salmon. ‘It even includes pledges to return the cash generated from slimming down non-core operations to shareholders. In a big way too: the plans suggest around a third of Bovis’ current market cap will be in shareholders’ pockets by 2020.’

That helped investors look beyond a 28% fall in profits to £45.8 million over the six months to the end of June, weighed down by the cost of customer redress and higher investment.

Key stats
Market capitalisation£682m
No. of shares out43m
No. of shares floating38m
No. of common shareholdersnot stated
No. of employees27566
Trading volume (10 day avg.)m
Turnover£3,361m
Profit before tax£94m
Earnings per share216.91p
Cashflow per share408.12p
Cash per share1,480.97p

Go-Ahead has more steam, says Jefferies

Profits may be down at one of Go-Ahead’s (GOG) franchises and the market is pricing for further falls, but Jefferies is convinced management can turn it around.

Analyst Joe Spooner retained his ‘buy’ recommendation and target price of £24.25 on the shares, which fell 6.4% to £16.46 yesterday.

Markets were spooked by the full-year results that showed profits at Govia Thameslink Railway (GTR), which is majority owned by Go-Ahead, fell 7.4% to £150.6 million.

However, Spooner said the full-year results were in line with expectations and there was ‘further growth in the final dividend’. He was also positive on ‘a newly set target that demonstrates international ambition’.

‘Most importantly, after revisiting GTR’s prospects, management still expects that franchise to be profitable over its full term,’ he said. ‘Our view has been that around current levels, Go-Ahead’s shares are priced for GTR to fail, an outcome management is clearly steering against.’

Key stats
Market capitalisation£2,406m
No. of shares out707m
No. of shares floating388m
No. of common shareholdersnot stated
No. of employees266
Trading volume (10 day avg.)1m
Turnover£212m
Profit before tax£128m
Earnings per share18.08p
Cashflow per share18.93p
Cash per share82.66p

Ashmore ‘well placed’ for emerging market resurgence, says Peel Hunt

Specialist emerging markets investment company Ashmore (ASHM) is well positioned for an investor return back to emerging markets, says Peel Hunt.

Analyst Stuart Duncan retained his ‘buy’ recommendation and target price of 400p on the shares, which fell 6.1% to 340.4p yesterday.

‘The outlook statement refers to the continuing value offered by the emerging market and even after a period of strong performance, investors remain underweight emerging market assets,’ he said.

‘Ashmore’s efficient business model positions it well to benefit from increasing investors allocation to emerging market assets.’

Key stats
Market capitalisation£109m
No. of shares out30m
No. of shares floating22m
No. of common shareholdersnot stated
No. of employees0
Trading volume (10 day avg.)m
Turnover£1m
Profit before tax£m
Earnings per share-1.39p
Cashflow per share-9,999,999.00p
Cash per share1.98p

ZPG makes another ‘sensible’ acquisition, says Numis

Zoopla and USwitch owner ZPG (ZPG) has made another acquisition, snapping up Money.co.uk, which Numis said was a ‘strong fit’ with its other companies.

Analyst Gareth Davies retained his ‘add’ recommendation and target price of 425p after the company announced it has acquired Money.co.uk for £80 million, with a performance earnout of up to £60 million.

Davies said the acquisition was a ‘very strong fit to USwitch and in line with ZPG’s stated strategy of expanding its financial service comparison business’.

‘All in all, a strategically sensible, earnings enhancing acquisition by the group very much in line with stated strategy and at an apparently sensible price,’ he said.

The shares rose 2% to 361.7p yesterday.

Key stats
Market capitalisation£360m
No. of shares out182m
No. of shares floating180m
No. of common shareholdersnot stated
No. of employees4616
Trading volume (10 day avg.)m
Turnover£681m
Profit before tax£17m
Earnings per share9.31p
Cashflow per share19.77p
Cash per share13.61p

Good value McBride offers long-term benefits, says Liberum

Household products maker McBride (MCB) weathered the storm of challenging markets and weak sterling, proving to Liberum that it is still an ‘attractive’ long-term investment case.

Analyst Wayne Brown reiterated his ‘buy’ recommendation and target price of 235p on the shares, which rose 1.6% to 196.3p yesterday on better-than-expected results.

‘McBride offers investors an attractive long-term investment case with significant self-help opportunities and long-term structural growth,’ he said.

‘The company is led by a strong management team with a proven track record. The “repair” phase of the group’s “repair, prepare, and grow” strategy to simplify its customer base, product range, raw material usage and organisational processes while improving customer service levels has delivered strong results.’

He added that the valuation was ‘inexpensive’.

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  • Bovis Homes Group PLC (BVS.L)
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  • Go-Ahead Group PLC (GOG.L)
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  • Ashmore Group PLC (ASHM.L)
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  • ZPG PLC (ZPG.L)
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  • McBride PLC (MCB.L)
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