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The Expert View: ITV, Inmarsat & Premier Foods

Our daily round-up of analyst commentary on shares, including Auto Trader and Findel.

by Michelle McGagh on Jun 12, 2018 at 05:30

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£2,442m
No. of shares out462m
No. of shares floating440m
No. of common shareholdersnot stated
No. of employees1854
Trading volume (10 day avg.)3m
Turnover1,044m USD
Profit before tax560m USD
Earnings per share0.29 USD
Cashflow per share0.96 USD
Cash per share0.79 USD

Wait for a better bid on Inmarsat, says Jefferies

Inmarsat (ISAT) has rejected a takeover bid from US rival EchoStar, and Jefferies believes the satellite company could hold out for as much as £11.00 a share.

Analyst Giles Thorne retained his ‘buy’ recommendation and target price of £10 on the stock, which shot up 11%, or 51.9p, to 525.8p on news of the approach late on Friday, which Inmarsat said ‘very significantly undervalued’ the company.

Thorne said the bid was not about sector consolidation ‘it’s about spectrum’ as American rival Ligado Networks could be on the cusp of finally getting its license modification reinstated’.

‘If we’re wrong, Inmarsat shareholders could hold out for as much as £11.00 per share,’ he said. ‘If we’re right, they should be pushing for something even higher. This is only the beginning.’

Inmarsat has struggled against difficult trading conditions and last month lost its monopoly in maritime safety systems after the International Maritime Organisation approved the products of two rivals. Thorne added that the ‘ferocity of the Inmarsat de-rating had begun to outweigh the evident dis-synergies and clunking logic of EchoStar bidding for Inmarsat’ and the fact the bid was rejected was ‘gratifying’.

Key stats
Market capitalisation£4,026m
No. of shares out948m
No. of shares floating918m
No. of common shareholdersnot stated
No. of employees824
Trading volume (10 day avg.)7m
Turnover£330m
Profit before tax£228m
Earnings per share17.70p
Cashflow per share18.43p
Cash per share0.45p

Auto Trader on the right track, says Peel Hunt

Near term problems for Auto Trader (AUTO) have eased but Peel Hunt said the outlook isn’t completely clear for the car classifieds business.

Analyst Jessica Pok retained her ‘add’ recommendation and increased the target price from 400p to 440p on the stock, which revved 1.9%, or 8p, higher at 425p.

‘Auto Trader provided a set of results that assured the market it is on the right tracks,’ she said. ‘While the trading environment remains challenging, the near-term headwinds have definitely eased.’

Although Pok updated her forecasts and there has been ‘some positive data for the car market recently’, she said ‘it is too soon to assume complete blue skies for Auto Trader’.

Key stats
Market capitalisation£6,919m
No. of shares out4,025m
No. of shares floating3,592m
No. of common shareholdersnot stated
No. of employees6055
Trading volume (10 day avg.)15m
Turnover£3,132m
Profit before tax£829m
Earnings per share10.41p
Cashflow per share13.29p
Cash per share3.13p

ITV has a big online opportunity, says Liberum

Video on demand has the potential to be a huge opportunity for ITV (ITV), according to Liberum.

Analyst Ian Whittaker reiterated his ‘buy’ recommendation and increased the target price from 265p to 275p on the stock. At the time of writing, shares were up 1.7%, or 2.9p, at 172p.

‘There is a huge opportunity for ITV in the online video on demand space,’ he said. ‘We estimate more than 45% of ITV’s profit growth will come from its online, pay, and interactive unity and that linear TV, although resilient, will become less important to the business.’

He added that if ITV can ‘capture a greater share of the online video on demand market’ there could be circa 20% upside to long-term forecasts.

Key stats
Market capitalisation£336m
No. of shares out841m
No. of shares floating666m
No. of common shareholdersnot stated
No. of employees4053
Trading volume (10 day avg.)1m
Turnover£819m
Profit before tax£137m
Earnings per share0.86p
Cashflow per share7.14p
Cash per share2.81p

Sustained growth needed at Premier Foods, says Shore Capital

Premier Foods (PFD) may have reported stronger than expected full-year results but Shore Capital said the company is yet to deliver sustained growth.

Analyst Darren Shirley retained his ‘hold’ recommendation on the stock, which traded up 0.6%, or 0.3p, at 39.9p.

He increased his medium-term forecasts for the group, which has benefited from cold weather, Easter timing, and a good Australian pipeline, which is all supported by ‘strengthening delivery on its strategic growth priorities’.

‘While our confidence in growth has increased, Premier has yet to demonstrate the sustained growth on growth in sales which would be required for us to review our current neutral recommendation,’ said Shirley.

Key stats
Market capitalisation£235m
No. of shares out86m
No. of shares floating58m
No. of common shareholdersnot stated
No. of employees1596
Trading volume (10 day avg.)m
Turnover£479m
Profit before tax£46m
Earnings per share22.68p
Cashflow per share34.75p
Cash per share30.36p

The Share Centre: buy into cheap Findel

Home shopping company Findel (FDL) is reaping the benefits of cost-cutting, but the shares are still trading at a relatively low multiple, says The Share Centre.

Analyst Ian Forrest retained his ‘buy’ recommendation ‘due to the potential for further growth’ in the express gifts arm of the business.

The group has cut costs and improved its distribution channels, leading to a pre-tax profit of £22.1 million, a vast improvement from the £59.4 million of losses reported last year.

‘The shares have made a good start to 2018 but continue to trade on just 9.5 times estimated 2020 earnings, which is relatively low compared to other retailers with mostly online sales, said Forrest.

‘The price-to-book value of 1.5 times is about average relative to peers and Findel is expected to see earnings growth over the next two years at least.’ Findel shares firmed 4p, or 1.5%, to 274p.

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