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The Expert View: Game, Man Group and Robert Walters

A round-up of analyst notes, including their take on Carillion and Stagecoach.

by Harry Brooks on Mar 02, 2012 at 05:01

We’ve rounded up some of the best comment from top analysts to give you their views on Game, Man Group, Robert Walters, Carillion and Stagecoach.

Key stats
Market capitalisation£16m
No. of shares out347m
No. of shares floating340m
No. of common shareholdersnot stated
No. of employees10218
Trading volume (10 day avg.)6m
Turnover£1,625m
Profit before tax£16m
Earnings per share4.51p
Cashflow per share13.30p
Cash per share43.53p

*Correct as at 1 Mar 2012

Singer says Game Group set to lose £2 million from Mass Effect 3 dispute

Mark Photiades, analyst at Singer Capital Markets, has restated his 'sell' recommendation on beleagured computer game retailer Game (GMG.L) on news that it is not to stock the hotly awaited title Mass Effect 3.

In a statement released on Wednesday, the group announced that it would not be able to fulfil orders for the action role-playing game, which is published by Electronic Arts. Customers who have ordered the game would have their deposits refunded and will be given £5 worth of reward points, the chain said.

According to Photiades, it appears that Electronic Arts was not able to supply Game with the title on the terms the retailer wanted. He has estimated that the loss of the title could cost the group £2 million to £2.5 million in lost profit, and he said that failing to stock the title would push disappointed customers to seek alternative stockists.

The analyst further warned that as he understands it the chain will not be stocking Nintendo’s upcoming release of Mario Party either. Commenting on the outlook for the retailer, Photiades said: 'The focus very much remains on pure survival as opposed to revival at this stage.'

Shares in the group closed at 4.80p on Thursday, down 0.12p or 2.44%.

Key stats
Market capitalisation£2,590m
No. of shares out1,852m
No. of shares floating1,670m
No. of common shareholdersnot stated
No. of employees1538
Trading volume (10 day avg.)9m
Turnover1,041m USD
Profit before tax118m USD
Earnings per share0.07 USD
Cashflow per share0.16 USD
Cash per share0.79 USD

*Correct as at 1 Mar 2012

Numis backs Man Group on new dividend policy

David McCann, analyst at Numis, has stuck with his 'buy' recommendation on Man Group (EMG.L), the world’s largest publicly traded hedge fund, amid improved results in the past two months and a new dividend policy.

The London-based firm estimated funds under management at the end of February at $59.5 billion (£37.4 billion), up from $58.4 billion at the end of December. It reported a pre-tax profit of $262 million for the nine months to the end of December, slightly above the $257 million it signalled in a trading statement in January.

The group also unveiled a revised dividend policy, whereby all of adjusted management fee earnings will be paid out as ordinary dividends, and net performance fee earnings will be distributed by way of higher dividends and/or share buy-backs. The stock currently offers the biggest dividend yield on the FTSE 100, with a projected payout of 22 cents per share this year.

On the new policy, McCann said: 'On balance, we think Man still offers attractive value at the current price, unless your view is that AHL will not deliver any decent returns or flows in the medium term,' referring to the group's managed futures division.

Shares in the group, for which McCann has a target price of 190p, closed at 141.84p on Thursday, up 10.94p or 8.36%.

Key stats
Market capitalisation£179m
No. of shares out77m
No. of shares floating63m
No. of common shareholdersnot stated
No. of employees1540
Trading volume (10 day avg.)0m
Turnover£424m
Profit before tax£9m
Earnings per share11.09p
Cashflow per share15.31p
Cash per share41.85p

*Correct as at 1 Mar 2012

Peel Hunt downgrades Robert Walters on gloomy outlook

Henry Carver, analyst at Peel Hunt, has downgraded specialist recruitment firm Robert Walters (RWA.L) from 'hold' to 'sell' as he believes the shares are now pricing in a recovery that is unlikely to materialise.

The analyst said trading in the fourth quarter of 2011 was in line with expectations, with gross profit rising 14% on a year-on-year basis (12% in constant currency terms) to £46.4 million.

However, he cautioned that the outlook was uncertain, as exceptionally strong trading in Germany and France is unlikely to continue throughout the year, he said. 'January and February trading have offered no signs to suggest that candidate and employee confidence have improved or are likely to improve materially in the short term,' he said.

Based on these concerns, Carver has chopped his recommendation on the shares: 'While we like the underlying business, we cannot see a catalyst to drive the shares from here and we expect to see some profit-taking at these levels.'

Shares in Robert Walters closed at 239.00p on Thursday, up 9.75p or 4.25%.

Key stats
Market capitalisation£1,402m
No. of shares out430m
No. of shares floating401m
No. of common shareholdersnot stated
No. of employees50000
Trading volume (10 day avg.)2m
Turnover£4,237m
Profit before tax£147m
Earnings per share36.74p
Cashflow per share52.96p
Cash per share99.25p

*Correct as at 1 Mar 2012

Morgan Stanley snips Carillion's price target

David Hancock, analyst at Morgan Stanley, has dropped his price target for construction services firm Carillion (CLLN.L) following a somewhat bearish outlook statement in the group's full-year results.

The major talking point in the statement, Hancock said, was an alteration in the language the firm used to describe its outlook for its support services business. Previously the guidance was for 'substantial growth', but this has now been watered down to 'growth'. According to management this is because investors were taking the earlier phrase to mean growth of more than 10%, when 5-10% growth was apparently intended.

Elsewhere in the statement Hancock noted that 2011 profits were marginally ahead of forecasts, and the pipeline of work for the support services business has grown 50% year on year. However, he cautioned, this impressive figure is dependent on a small number of large contracts.

Based on this mixed bag of results, the analyst has dropped his price target from 420p to 400p.

Shares in the group closed at 330.00p on Thursday, up 5p or 1.54%.

Key stats
Market capitalisation£1,564m
No. of shares out576m
No. of shares floating416m
No. of common shareholdersnot stated
No. of employees31799
Trading volume (10 day avg.)2m
Turnover£2,390m
Profit before tax£158m
Earnings per share27.22p
Cashflow per share44.53p
Cash per share71.01p

*Correct as at 1 Mar 2012

Oriel lukewarm on steady Stagecoach

Edward Stanford, analyst at Oriel Securities, has retained his 'add' recommendation on bus and train operator Stagecoach (SGC.L) following news that revenues have improved at the group in the latest quarter.

In the nine months to 5 February UK bus revenues rose 3%, while UK rail revenues rose 9.5%.

'In essence,' Stanford said, 'trends in like for like revenue have continued in the same vein as the first half. If anything, our arithmetic shows a strengthening of growth in the third quarter in most divisions, but this is likely to have something to do with weak comparatives'.

The analyst noted that shares in the company continue to trade at a premium to the sector, but he said this was justified by the group's reliable financial performance. However, he does not currently see much upside to the share price, hence his lukewarm stance on the stock.

Shares in the company closed at 274.70p on Thursday, up 6.30p or 2.35%.

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  • Man Group PLC (EMG.L)
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  • Robert Walters Plc (RWA.L)
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  • Carillion PLC (CLLN.L)
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  • Stagecoach Group PLC (SGC.L)
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  • GAME Group PLC (GMG.L)
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