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The Expert View: Legal & General, Just Eat and Bunzl

Our daily roundup of analyst commentary on shares, also including Segro and Countryside.

by Michelle McGagh on Apr 19, 2018 at 05:00

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Key stats
Market capitalisation£16,351m
No. of shares out5,959m
No. of shares floating5,840m
No. of common shareholdersnot stated
No. of employees7570
Trading volume (10 day avg.)15m
Turnover£40,491m
Profit before tax£3,087m
Earnings per share26.26p
Cashflow per share27.79p
Cash per share317.52p

L&G poised for long-term growth, says Berenberg

Insurer Legal & General (LGEN) is set for long-term growth after shedding the baggage of old legacy businesses, says Berenberg.

Analyst Trevor Moss retained his ‘buy’ recommendation and increased his target price from 301p to 334p. The shares rose 1.7% to 274.3p yesterday.

He said the insurance giant ‘continues to reap the benefits of its focused strategy’ that has seen it allocate capital to ‘what they are good at’.

‘Unlike some other companies in the sector, any baggage relating to previous strategies and legacies has been eradicated and the disposal of legacy insurance liabilities in December to Swiss Re was the final part of this completed,’ he said.

‘The company is pointing in the right direction and has a strategy that we believe will continue to deliver genuine growth into the long term.’

Key stats
Market capitalisation£4,906m
No. of shares out680m
No. of shares floating586m
No. of common shareholdersnot stated
No. of employees2116
Trading volume (10 day avg.)3m
Turnover£546m
Profit before tax£159m
Earnings per share-15.17p
Cashflow per share-9.62p
Cash per share38.99p

Investment leaves Just Eat better placed in long term, says Liberum

Investment at Just Eat (JE) will have washed through by 2020, leaving the company in a better strategic position, says Liberum.

Analyst Ian Whittaker retained his ‘buy’ recommendation but reduced the target price from 935p to 850p. The shares fell 5p to 721p yesterday.

‘While there are significant downgrades for 2018 and 2019 due to extra investments, particularly around home delivery for chains, our initial view is that these should have washed through by 2020, leading to a group with a higher revenue growth profile and a better strategic position’ he said.

However, Whittaker added that if there was not ‘more clarity on the plans’ at the capital markets day in June then the shares would face ‘an element of uncertainty’.

Key stats
Market capitalisation£7,103m
No. of shares out336m
No. of shares floating328m
No. of common shareholdersnot stated
No. of employees17595
Trading volume (10 day avg.)1m
Turnover£8,581m
Profit before tax£621m
Earnings per share93.50p
Cashflow per share132.01p
Cash per share99.31p

Bunzl can continue steady growth, says Shore Capital

Outsourcing group Bunzl (BNZL) has delivered a first quarter trading update that has reaffirmed Shore Capital's expectations of steady growth.

Analyst Robin Speakman reiterated his ‘buy’ recommendation on the shares, which fell 12p to £21.22 yesterday.

He said first quarter results showed ‘a strong performance and above our model trend trajectory’ and that while there was no breakdown of numbers ‘this stronger performance is principally driven by North American grocery’.

‘Overall a very good statement…we expect steady underlying growth and strong cash conversion to continue,’ he said.

Key stats
Market capitalisation£6,326m
No. of shares out1,003m
No. of shares floating996m
No. of common shareholdersnot stated
No. of employees293
Trading volume (10 day avg.)2m
Turnover£297m
Profit before tax£207m
Earnings per share94.54p
Cashflow per share95.09p
Cash per share11.16p

Segro still attractive despite premium, says Numis

Industrial real estate investment trust (Reit) Segro (SGRO) is still one of the most attractive names in its sector despite the shares trading at a premium, says Numis.

Analyst Paul Gorrie retained his ‘add’ recommendation and target price of 681p on the stock following first quarter results that showed ‘healthy ongoing occupier demand for its product’.

‘Its upscaled development pipeline continues to see good levels of pre-letting and take-up,’ he said.

‘Management also referenced ongoing yield compression, which has been sustained by good levels of investor demand. Segro’s scale and speed of development is key to its return profile, and the first quarter suggests that momentum continues.’

Gorrie added that despite the shares trading on a 10% premium to the net asset value, ‘we continue to view Segro as one of the most attractive names in our universe at this time’.

The shares rose 5p to 631.2p yesterday.

Key stats
Market capitalisation£1,620m
No. of shares out450m
No. of shares floating390m
No. of common shareholdersnot stated
No. of employees1164
Trading volume (10 day avg.)1m
Turnover£846m
Profit before tax£133m
Earnings per share25.86p
Cashflow per share26.52p
Cash per share17.20p

Peel Hunt predicts Countryside divi boost

Peel Hunt is expecting property developer Countryside Properties (CSPC) to increase its dividends over the next three years.

Analyst Gavin Jago retained his ‘buy’ recommendation and increased his target price from 420p to 470p after ‘solid’ trading in the first half, boosted by the acquisition of Westleigh Homes.

‘Following the Westleigh acquisition, we have increased our earnings per share forecasts by 3% for 2018, 8% for 2019, and 11% for 2020,’ he said.

‘The earnings growth over the next three years and the strength of the balance sheet supports a strong increase in dividend pay-outs, with a yield of 3% and rising.’

The shares were flat at 360.4p yesterday.

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  • Bunzl plc (BNZL.L)
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  • Countryside Properties PLC (CSPC.L)
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  • Just Eat PLC (JE.L)
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  • Legal & General Group PLC (LGEN.L)
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  • SEGRO PLC (SGRO.L)
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