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/a1113258

The Expert View: Capita, SSP and Ten Entertainment

Our daily roundup of analyst commentary on shares, also including Arix Bioscience and Amerisur Resources.

by Michelle McGagh on Apr 24, 2018 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£1,210m
No. of shares out667m
No. of shares floating661m
No. of common shareholdersnot stated
No. of employees74755
Trading volume (10 day avg.)5m
Turnover£4,898m
Profit before tax£641m
Earnings per share5.55p
Cashflow per share44.20p
Cash per share178.57p

Capita outlook remains negative, says Shore Capital

Outsourcing giant Capita (CPI) has brought forward its restructuring and results and Shore Capital said the outlook was still negative.

Analyst Robin Speakman retained his ‘hold’ recommendation on the stock after full-year results that ‘appear a little behind our heavily reduced forecasts’, with a £701 million rights issue set at a ‘heavily discounted’ 70p.

‘We balance in our thoughts relief of the transaction being competed by a potential overhang of stock from investors concerned over the potential likely extended recovery of Capita. We expect to mull over [the] announcement and reset our model, likely it taking a few days to reach new conclusions as to the outlook,’ he said.

However, Speakman added that ‘Capita’s outlook statement remains negative in terms of the immediate impact of restructuring, contract and volume attrition, and the current operating environment’.

The shares jumped 12.6% to 179.9p yesterday.

Key stats
Market capitalisation£3,005m
No. of shares out464m
No. of shares floating452m
No. of common shareholdersnot stated
No. of employees36783
Trading volume (10 day avg.)1m
Turnover£2,379m
Profit before tax£258m
Earnings per share19.87p
Cashflow per share44.66p
Cash per share38.73p

Numis identifies growth drivers at SSP

Shares in Upper Crust owner SSP (SSPG) have fallen since its first quarter update but Numis believes there are both short- and long-term business drivers.

Analyst Tim Barrett retained his ‘add’ recommendation and target price of 710p on the shares, which were trading at 649.5p yesterday.

The shares have fallen 7% since the update in January, despite reporting a strong start to the year.

Barrett said there were ‘two long-term earnings drivers: margin upside from labour efficiency and scope for market share gains in the US’ as well as ‘shorter term, reassuring recent passenger data’ that suggests a ‘strong first-half performance is likely’.

He added that there was ‘substantial upside’ to the valuation ‘in which we have high conviction given management’s strong track record’.

Key stats
Market capitalisation£m
No. of shares out65m
No. of shares floating59m
No. of common shareholdersnot stated
No. of employees1134
Trading volume (10 day avg.)m
Turnover£71m
Profit before tax£19m
Earnings per share7.96p
Cashflow per share16.90p
Cash per share8.57p

Ten Entertainment can strike it big, says Peel Hunt

Bowling operator Ten Entertainment (TEG) is set to benefit from the huge potential for market growth, says Peel Hunt.

Analyst Douglas Jack reiterated his ‘buy’ recommendation and target price of 325p on the shares, which rose 1.5% to 264p yesterday.

‘Bowling market demand is growing at 6-7% per annum, driven by two operators, with minimal supply growth,’ he said. ‘At c.£300 million of annual sales, the market has huge potential to grow, from being just 3% of the UK’s £10 billion family entertainment market.

‘These factors combined with strong systems, management and innovation, should enable the track record for high return on investment to continue.’

Jack added that the shares traded on a 20% 2019 price/earnings discount to rival Hollywood Bowl and offered a 5.1% dividend yield versus 3.7%.

Jefferies: easier to appreciate Arix

Jefferies is predicting Arix Bioscience (ARIX) will invest in more companies this year, allowing its track record to develop.

Analyst Ken Rumph retained his ‘buy’ recommendation and target price of 268p on the shares, which were trading at 197.1p yesterday.

He said 2018 was set to be a ‘busy year’ after the company raised £87 million in March.

‘We expect another several investments to add to 13 portfolio companies, plus multiple value-inflecting events – clinical trials, new candidates, commercial deals, IPOs,’ he said.

‘The quartet of corporate partners should also bear fruit. Arix has made a positive start to listed life, and this should accelerate as time allows the track record to develop.’

Rumph added that the management team was now at ‘full strength’ and a ‘significant portfolio established’, meaning ‘the Arix model is easier to appreciate’.

Key stats
Market capitalisation£216m
No. of shares out1,213m
No. of shares floating906m
No. of common shareholdersnot stated
No. of employees76
Trading volume (10 day avg.)8m
Turnover66m USD
Profit before tax13m USD
Earnings per share0.01 USD
Cashflow per share0.02 USD
Cash per share0.02 USD

The Share Centre: Amerisur ‘most undervalued’ oil stock

Alternative Investment Market-listed oil and gas company Amerisur Resources (AMER) is one of the market’s ‘most undervalued small-cap oil stocks’, says The Share Centre.

Analyst Helal Miah said the stock was a ‘buy’ for growth-seeking investors ‘willing to accept a higher level of risk’.

The company has reported revenue growth of 96% year-on-year due to higher oil prices and increased production.

‘The firm currently wholly owns the OBA oil transfer line into Ecuador and has plans to expand its exploration portfolio,’ said Miah.

‘The outlook for 2018 appears positive and sustainable growth is expected, if all commitments are met Amerisur is in a very strong position.’

However, he added that ‘this is a small oil and gas exploration firm operating in a potentially unstable region and thus represents a high risk investment’.

The shares fell 3.9% to 17.5p yesterday.

More about this:

Look up the shares

  • Amerisur Resources PLC (AMER.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Arix Bioscience PLC (ARIX.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Capita PLC (CPI.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • SSP Group PLC (SSPG.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Ten Entertainment Group PLC (TEG.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