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The Expert View: Next, N Brown and Galliford Try

Our daily roundup of analyst commentary on shares, also including WANdisco and Staffline.

by Michelle McGagh on Jan 04, 2018 at 05:00

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Key stats
Market capitalisation£7,022m
No. of shares out146m
No. of shares floating137m
No. of common shareholdersnot stated
No. of employees30525
Trading volume (10 day avg.)1m
Turnover£4,097m
Profit before tax£943m
Earnings per share438.14p
Cashflow per share517.24p
Cash per share33.80p

Next delivers presents to investors, says Hargreaves

Next (NXT) has delivered a belated Christmas present to shareholders as sales improved and Hargreaves Lansdown believes investors should also be optimistic about the outlook from chief executive Simon Wolfson.

The retailing giant reported full price sales from 1 November to 24 December were up 1.5% on last year, an improvement on the group’s prior guidance for sales to fall 0.3%. The shares jumped 6.7% to £48 yesterday on the news.

Analyst George Salmon said the results were a ‘belated by very welcome Christmas present’.

‘Colder weather may have boosted sales in the run-up to Christmas, but the real positive is the more optimistic outlook from Wolfson,’ he said.

‘The long-service chief executive has an excellent reputation in the industry, so for him to say that one or two of the headwinds facing the UK’s retailers should ease in the year ahead represents a significant fillip to the sector.’

Key stats
Market capitalisation£809m
No. of shares out283m
No. of shares floating146m
No. of common shareholdersnot stated
No. of employees2742
Trading volume (10 day avg.)m
Turnover£901m
Profit before tax£71m
Earnings per share15.66p
Cashflow per share25.41p
Cash per share22.62p

Jefferies: N Brown shares ready to rebound

Specialist clothing retailer N Brown (BWNG), which owns Simply Be and Jacamo, is ready to rebound from its share price weakness, according to Jefferies.

Analyst Joe Spooner retained his ‘buy’ recommendation and target price of 400p on the shares, which rose 6.75 to 284.4p yesterday.

‘We consider N Brown’s share price weakness over the last quarter as reflecting the unwind of prior sector outperformance ahead of the peak trading period,’ he said.

‘But, with online expected once again to have gained share across the UK retail sector and with N Brown entering the period with a broad base of momentum across brands, product categories and customer trends, we believe its shares are well placed to rebound from recent lows.’

Key stats
Market capitalisation£1,077m
No. of shares out83m
No. of shares floating80m
No. of common shareholdersnot stated
No. of employees5506
Trading volume (10 day avg.)m
Turnover£2,705m
Profit before tax£152m
Earnings per share58.75p
Cashflow per share66.71p
Cash per share923.90p

Galliford Try could double earnings by 2021, says Liberum

Liberum believes Galliford Try (GFRD) offers the most upside among house builders, given the valuation has been impacted by errors in construction.

Analyst Joe Brent retained his ‘buy’ recommendation and target price of £15.50 on the shares, which edged 5p higher to £12.94 yesterday.

‘We see most upside in Galliford Try,’ he said. ‘The historic, and not to be repeated, errors in construction have a disproportionate effect on valuation, which also does not reflect the prospects and high quality of [housebuilding brand] Linden and partnerships.’

Brent added that he was confident that improvement plans at the company ‘could deliver at least 60% profit before tax growth by 2021 and might even lead to doubling earnings before interest and tax’.

Key stats
Market capitalisation£277m
No. of shares out43m
No. of shares floating32m
No. of common shareholdersnot stated
No. of employees125
Trading volume (10 day avg.)m
Turnover8m USD
Profit before tax-7m USD
Earnings per share-0.21 USD
Cashflow per share-0.01 USD
Cash per share0.15 USD

WANdisco tech is a ‘silver bullet’, says Peel Hunt

Software company WANdisco (WAND) has announced a record contract win that Peel Hunt says shows its technology remains a ‘silver bullet’ for data replication.

Analyst Damindu Jayaweera retained his ‘buy’ recommendation and target price of £10.00 on the shares, which jumped 10.5% to 630p yesterday.

‘With the demand for active data replication showing no signs of slowing, WANdisco announced a record contract win… with one of the world’s leading financial institutions,’ he said.

‘Due to the business-critical nature of the data handled, extensive testing over several months was required, and WANdisco was selected as the only viable solution in the market… this deal marks another proof point that WANdisco’s technology remains the silver bullet for active data replication.’

Key stats
Market capitalisation£278m
No. of shares out28m
No. of shares floating24m
No. of common shareholdersnot stated
No. of employees2485
Trading volume (10 day avg.)m
Turnover£882m
Profit before tax£48m
Earnings per share58.78p
Cashflow per share126.57p
Cash per share70.99p

FinnCap: Staffline shares to surprise on the upside

Recruitment and training company Staffline (STAF) is likely to surprise on the upside as it wins more contracts and grows through acquisition, according to FinnCap.

Analyst Guy Hewett reiterated his ‘buy’ recommendation and target price of £10.10 on the shares, which fell 1.4% to 996p yesterday.

The company has confirmed full-year results would be in line with expectations, with sales growth up 9% on 2016, while demand in staffing has remained strong in the second half of 2017.

‘With a 2017 price/earnings of only 8.7x, Staffline is valued at the lower end of both the recruitment sector and the outsourcing sector,’ said Hewett.

‘The group’s strong growth track record to date and balance sheet suggest a combination of future contract wins and/or investment in growth through acquisitions are likely to surprise on the upside against the share price’s very modest expectations.’

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Look up the shares

  • Next PLC (NXT.L)
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  • N Brown Group PLC (BWNG.L)
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  • WANdisco PLC (WAND.L)
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  • Galliford Try PLC (GFRD.L)
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  • Staffline Group PLC (STAF.L)
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