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The Expert View; ITV, Unilever and British Land
Our daily roundup of analyst commentary on shares, also including Clinigen and Amec Foster Wheeler.
by Michelle McGagh on Jan 20, 2016 at 05:00
ITV: more special dividends on cards?
More special dividends could be on the cards at ITV (ITV), building on the payouts made in 2012, 2013 and 2014, according to Shore Capital.
A special payout of 4p in 2012 and 2013 was followed by a 6.25p payment in 2014, taking total payouts for those years to 6.6p, 7.5p and 10.95p.
‘We would highlight the group’s unrivalled ability to deliver a large mass market audience to advertisers, our expectations of 43% and 76% aggregate earnings per share and dividend per share respectively over a three-year view and a robust UK advertising spend outlook as key attractions,’ he said. ‘We also regard further special dividends as a real possibility during full year 2016 and full year 2017, or both.’
Davidson reiterated his ‘buy’ rating on the shares, which rose 2.1% to 262.8p yesterday.
Amec Foster Wheeler boss steps down
The chief executive of oil and gas engineer Amec Foster Wheeler (AMFW) has stepped down, reinforcing the challenges the company faces.
Jefferies analyst Mark Wilson reiterated his ‘underperform’ recommendation and slashed the target price from 455p to 295p. The shares fell 2.7% to 381.5p yesterday.
‘The announcement of chief executive Samir Brikho stepping down gave Amec Foster Wheeler a supportive day of trading [on Monday],’ he said. ‘However, that news, taken in parallel with our update, only serves to reinforce the challenge any incoming chief executive faces.
‘We reiterate our “underperform” rating and reduce our price target by 35% to 295p seeing further risk to the dividend as sales and margins remain under pressure and yet Amec still trades at premium multiples on some metrics.’
British Land showing sustained momentum
Third quarter results from real estate investment trust (Reit) British Land (BLND) show ‘sustained operational momentum’.
Numis analyst Robert Duncan retained his ‘add’ recommendation and target price of 857p on the shares, which were broadly flat at 715p yesterday.
‘An in-line Q3 2016 update from British Land shows sustained operational momentum with the majority of letting activity focused on retail due to high occupancy in offices,’ he said.
‘Loan-to-value reduced 1 percentage point to 33% while [total cost of debt] fell 20 basis points to 3.4% on refinancing exposure to single let retail assets to focus on multi-let.’
Duncan said that heads of terms for the development agreement at Canada Water have also been agreed and ‘while this remains a long-dated scheme, this is a positive early milestone’.
He added: ‘Elsewhere, it is pushing on with its plans to increase the amount of retail space at 100 Liverpool Street and pricing of the £20 million of residential sales completed in the quarter were in line with the H1 valuation.’
Clinigen reaping rewards of transformative year
Pharmaceutical company Clinigen (CLINC) has had a ‘transformative’ 12 months thanks to acquisitions and new agreements.
Peel Hunt analyst Charles Hall retained his ‘buy’ recommendation and target price of £10.00 on the shares, which fell 5.7% to 598.6p yesterday.
‘The last 12 months has been transformative with the acquisitions of Idis and Link as well as the agreement with Cumberland,’ he said.
‘The benefits do not show through in H1, but will become increasingly apparent. The company has had a solid H1 with pro forma gross profit +4%, with the prospect of a stronger H2 due to the timing of shipments of [herpes treatment] Foscavir as well as projects in clinical trial supply services.
‘In addition, the pipeline in managed access is descried as “excellent” and should start to be delivered in H2.’Hall added that the company was ‘well set to develop its global footprint’.
‘Unsurprisingly during a period of substantial change the rate of organic growth has slowed. However, there are clear signs of a stronger performance in H2 and the rate of new business wins is encouraging. Clinigen is well positioned to deliver strong growth and is on an attractive rating of 15.8x price earnings to June 2017.’
Tough 2016 predicted for Unilever
Unilever (ULVR) is expecting a tough 2016 due to higher volatility and low margins.
Liberum analyst Robert Waldschmidt retained his ‘sell’ recommendation and target price of £24.20 on the shares, which rose 3.2% to £29.34 yesterday.
‘Unilever reported solid Q4 organic sales of 4.9% versus consensus of 4% driven by emerging markets on 8.1% and personal care on 4.1%,’ he said.
‘Unilever guided to tougher markers and higher volatility in 2016 and expects to deliver volume-led growth ahead of markets and steady improvement in core operating margin and cash flow.’
Waldschmidt said he expected a slowdown in earnings per share growth in 2016 as ‘foreign exchange shifts from a 6% tailwind to a headwind, deflation hits European sales and inflation-linked pricing in emerging markets starts to weigh on volumes’.
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Look up the shares
- ITV PLC (ITV.L)
- Unilever PLC (ULVR.L)
- Amec Foster Wheeler PLC (AMFW.L)
- British Land Company PLC (BLND.L)
- Clinigen Group PLC (CLINC.L)