Citywire for Financial Professionals
Share this page:
Stay connected:

 

Citywire printed articles sponsored by:


View the rest of this gallery online at http://citywire.co.uk/money/gallery/a1069230

The Expert View: Bovis, Tesco and Shire

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

by Michelle McGagh on Nov 15, 2017 at 05:00

If you would like to receive news alerts on any of the stocks mentioned in The Expert View, click on the star icons below to add them to your favourites.
Key stats
Market capitalisation£1,531m
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£162m
Earnings per share89.97p
Cashflow per share91.66p
Cash per share28.66p

Bovis divi will be a major draw, says Peel Hunt

A ‘robust’ update from Bovis Homes (BVS) is good news but the real draw for investors will be a dividend yield of over 9%, says Peel Hunt.

Analyst Clyde Lewis retained his ‘add’ recommendation and target price of £11.80 on the stock after a ‘robust trading update from Bovis indicates that the operational changes made by the new chief executive are beginning to feed through’. The shares rose 3.1% to £11.39 yesterday.

‘The shares stand 37% up year-to-date, in line with the sector after seeing a big bounce in the last six months following the appointment of a new chief executive and decision to run for cash and pay out the majority of earnings in dividends over the next three years,’ said Lewis.

‘As a result the dividend yield of over 9% in full-year 2018 will be a major draw for investors although the price/net asset value versus return on equity is not attractive versus the peer group – 12x versus sector average of 8.7x. We retain our “add” recommendation because of the yield.’

Key stats
Market capitalisation£15,429m
No. of shares out8,191m
No. of shares floating8,030m
No. of common shareholdersnot stated
No. of employees133041
Trading volume (10 day avg.)28m
Turnover£55,917m
Profit before tax£2,637m
Earnings per share0.88p
Cashflow per share16.70p
Cash per share83.57p

Hargreaves flags Booker hurdles for Tesco

The Competition and Markets Authority (CMA) has provisionally approved the merger between Tesco (TSCO) and Booker but Hargreaves Lansdown believes the supermarket’s shareholders could prove the next hurdle.

Tesco shares rose 6.5% yesterday as the supermarket said it now expected the merger to complete in the first half of next year.

Analyst Laith Khalaf said the ‘fly in the ointment could yet be Tesco shareholders, with some influential players still not backing the merger’.

‘It remains to be seen if there’s a silent majority out there who will give the deal the nod, or whether the vocal critics of the proposals are reflective of wider discontent among the ranks of Tesco investors,’ he said.

‘The problem is there’s a fine line between genius and lunacy, and this deal looks to be walking it. The concern is that Tesco is trying to run before it can walk, and that a big merger like this could blow its nascent recovery off course.’

Key stats
Market capitalisation£m
No. of shares out909m
No. of shares floating908m
No. of common shareholdersnot stated
No. of employees23906
Trading volume (10 day avg.)3m
Turnover8,690m USD
Profit before tax2,626m USD
Earnings per share0.59 USD
Cashflow per share2.04 USD
Cash per share0.45 USD

Liberum upgrades ‘too cheap’ Shire

Liberum has upgraded pharmaceutical group Shire (SHP) after falls in the share price that has made the company ‘too cheap’.

Analyst Roger Franklin upgraded his recommendation from ‘hold’ to ‘buy’ with a target price of £42. The roses rose 2.1% to £35.73 yesterday.

Franklin was upbeat about the prospects for Shire’s haemophilia drug trials, with haemophilia worth £8 a share, he said.

‘Shire is down 21% since we downgraded the name on 1 June,’ he said. ‘We have resisted upgrading it twice since then as we were insufficiently excited by the valuation for a stock with limited near term pipeline catalysts and the double overhangs of haemophilia and M&A.

‘However, with the stock now below £35.00, we believe almost the entire value of haemophilia has been discounted from the shares.’

Key stats
Market capitalisation£4,744m
No. of shares out678m
No. of shares floating646m
No. of common shareholdersnot stated
No. of employees25531
Trading volume (10 day avg.)3m
Turnover3,125m USD
Profit before tax273m USD
Earnings per share0.06 USD
Cashflow per share0.36 USD
Cash per share1.15 USD

Numis downgrades consolidating Wood Group

Numis has downgraded Wood Group (WG) as the oil services business looks to consolidate after its acquisition of Amec Foster Wheeler.

Analyst James Hubbard downgraded his recommendation from ‘buy’ to ‘add’ with a target price of 820p. The shares fell 1.4% to 698p yesterday.

Wood Group agreed with the Competition and Markets Authority (CMA) to sell a number of assets to allay competition concerns over its takeover of Amec. Hubbard said the disposals made ‘little difference to our original deal conclusions’ and ‘strategically it makes sense in terms of achieving a relatively lower risk opportunistic step change in growth’.

‘We maintain our 820p price target but lower our rating to “add”, from “buy”, following the shares’ 28% rise since early September,’ he said.

Key stats
Market capitalisation£101m
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£1m
Earnings per share-1.39p
Cashflow per share-9,999,999.00p
Cash per share1.98p

No threat to Zoopla from challenger IPO, says Jefferies

ZPG (ZPG), owner of property search engine Zoopla, shouldn’t be concerned about On The Market’s plans to float as it has failed to sign up two of the country’s biggest estate agents, says Jefferies.

Analyst Anthony Codling retained his ‘buy’ recommendation and target price of 542p on the shares, which edged 1.5p lower to 335p yesterday.

‘ZPG has lived with the threat of On The Market for seven years,’ said Codling. ‘The challenger portal came out of the blocks fighting in 2015, but in our view has lacked the stamina and skill of ZPG. With fewer than one in three agents backing On The Market, ZPG remains our top pick.’

He added that ‘it is clear On The Market’s IPO and growth plans would have had a higher chance of success with Countrywide and Connells on board’ but maybe ‘neither could see the attractions in the equity story’ of the company.

More about this:

Look up the shares

  • Bovis Homes Group PLC (BVS.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Tesco PLC (TSCO.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Shire PLC (SHP.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • John Wood Group PLC (WG.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • ZPG PLC (ZPG.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

More galleries

 See all

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

Sorry, this link is not
quite ready yet