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The Expert View: Centamin, HMV, Imagination and Barclays

A roundup of some of analyst commentary on shares including Centamin and Wood Group.

by Harry Brooks on Dec 14, 2012 at 05:01

Our daily round-up of analyst recommendations and commentary, featuring Centamin, Barclays, HMV, Wood Group and Imagination Technologies.

Key stats
Market capitalisation£318m
No. of shares out1,101m
No. of shares floating1,025m
No. of common shareholdersnot stated
No. of employees1111
Trading volume (10 day avg.)6m
Turnover211m USD
Profit before tax113m USD
Earnings per share0.10 USD
Cashflow per share0.13 USD
Cash per share0.09 USD

*Correct as at 13 Dec 2012

Westhouse puts Centamin under review as shares tumble

Nick Hatch, analyst at Westhouse, has put his 'buy' recommendation on Centamin (CEY.L) under review after the miner announced it had suspended operations at its Sukari mine in Egypt.

The shares lost as much as 57% yesterday morning after Centamin announced it was subject to what it called an ‘illegal retrospective claim from Egyptian General Petroleum Corporation for about $65 million for diesel fuel’ and ‘an unforeseen and arbitrary request from customs officials’ that led to its shipments of gold being halted.

Hatch said the announcement is clearly bad news in the short term. Analysts at Investec agreed, saying although the issue would be resolved it more than offsets the upside potential of the group.

Centamin shares at 27.77p on Thursday, down 21.9p or 41.6%. They have lost two thirds of their value this year, valuing the company at £314 million.

Key stats
Market capitalisation£10m
No. of shares out424m
No. of shares floating338m
No. of common shareholdersnot stated
No. of employees5653
Trading volume (10 day avg.)4m
Profit before tax£-38m
Earnings per share-8.95p
Cashflow per share-3.57p
Cash per share4.51p

*Correct as at 13 Dec 2012

Seymour Pierce says 'sell' HMV

Freddie George, analyst at Seymour Pierce, has reiterated his 'sell' recommendation on HMV (HMV.L) after the music retailer warned it's in danger of breaching its banking agreements unless Christmas sales pick up soon.

The retailer said it has '12 critical days' to shift CDs and iPod gubbins after sales in the first half of the festive month got off to a bad start. The shares lost over a third of their value in the wake of the news, wiping out the spike seen in the chart above, which followed the ongoing sale of various assets in an effort to keep debts under control.

'At this stage, we see no reason to change our SELL recommendation or our price target of 1p as we are unconvinced that the shift in mix towards portable digital technology will be enough to offset the structural pressures on its core business of music, vision and gaming,' George said.

'We continue to see HMV as a value trap with potentially insurmountable structural issues.'

Shares in the group closed at 2.48p on Thursday, down 1.62p or 39.4%.

Key stats
Market capitalisation£1,083m
No. of shares out265m
No. of shares floating235m
No. of common shareholdersnot stated
No. of employees967
Trading volume (10 day avg.)1m
Profit before tax£20m
Earnings per share7.45p
Cashflow per share9.56p
Cash per share25.08p

*Correct as at 13 Dec 2012

Peel Hunt sees bright future for Imagination Technologies

Alexandra Jarvis, analyst at Peel Hunt, has reiterated her 'buy' recommendation on Imagination Technologies (IMG), saying the interim results gave plenty of reasons for investors to look at the chip designer.

Although Jarvis cut her pre-tax profit forecast for the company from £44 million to £37.7 million as a result of higher costs, including the acquisition of a camera technology business, she said royalty growth of 66% year-on-year was highly encouraging.

'There is no doubting that IMG’s end-market exposure is excellent,' she said. 'Over the next year, IMG should be able to demonstrate a diversification into new segments and beyond graphics, and should also extend a performance lead in graphics.'

However, the analyst did stress Imagination needs to act to reduce the volatility of its shares by doing a better job of managing consensus expectations and newsflow.

Imagination is a member of Citywire Top Stocks through its top 10 position in the AXA Framlington UK Select Opportunities fund run by Nigel Thomas. Shares in the group closed at 408p on Thursday, down 17p or 4%.

Key stats
Market capitalisation£31,064m
No. of shares out12,241m
No. of shares floating10,493m
No. of common shareholdersnot stated
No. of employees139000
Trading volume (10 day avg.)44m
Profit before tax£3,007m
Earnings per share24.01p
Cashflow per share40.26p
Cash per share876.25p

*Correct as at 13 Dec 2012

Shore Capital welcomes Sants' arrival at Barclays

Gary Greenwood, analyst at Shore Capital, has welcomed the appointment of Hector Sants to Barclays (BARC.L)'s executive board, saying he has the credentials to straighten out the bank's less than brilliant track record with regulators.

'We view this as another strong appointment by the company given Sants’ impressive curriculum vitae, which includes being the former head of the Financial Services Authority (FSA), deputy governor designate of the Bank of England (BoE), CEO designate of the Prudential Regulation Authority and member of the Financial Policy Committee,' the analyst said.

Nonetheless, he said the hiring of Sants wouldn't solve all its regulatory issues overnight. As a result he reiterated his 'neutral' stance on the shares despite what he said was an undemanding price-to-earnings valuation of 6.3 times.

Shares in the bank closed at 253.9p on Thursday, up 1.3p or 0.5%.

Key stats
Market capitalisation£2,747m
No. of shares out371m
No. of shares floating297m
No. of common shareholdersnot stated
No. of employees39200
Trading volume (10 day avg.)2m
Turnover3,517m USD
Profit before tax29m USD
Earnings per share0.08 USD
Cashflow per share0.31 USD
Cash per share0.38 USD

*Correct as at 13 Dec 2012

Canaccord trims target price for Wood Group

James Evans, analyst at Canaccord, has cut his target price for oil services business Wood Group (WG.L), saying it looks like growth next year will be lower than expected.

Although the group's interim management statement says it expects 'good growth' in 2013 Evans said there are reasons for caution. He noted that there's been a big slowdown in engineering headcount growth, which is now at 10,300 versus end of June (10,100) and end of last year (9,100).

'This would imply a topline engineering slow down to high single-digit revenue growth next year (versus about 25% this year) - and around 15% earnings growth (versus guidance of 30%+ for 2012 and consensus of 20%+),' he said.

Evans' target price falls 2% to 900p, and he retains his 'hold' recommendation.

Shares in the group closed at 733.5p on Thursday, down 35p or 4.6%.

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  • Barclays PLC (BARC.L)
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  • Centamin PLC (CEY.L)
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  • HMV Group PLC (HMV.L)
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  • John Wood Group PLC (WG.L)
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  • Imagination Technologies Group PLC (IMG.L)
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