Citywire for Financial Professionals
Share this page:
Stay connected:

 

Citywire printed articles sponsored by:


View the rest of this gallery online at http://citywire.co.uk/money/gallery/a576246

The Expert View: Sainsbury's, Cairn Energy and Ted Baker

A round-up of analyst notes, including their take on Balfour Beatty and Yule Catto

by Harry Brooks on Mar 22, 2012 at 05:01

We’ve rounded up some of the best comment from analysts to give you their views on Sainsbury's, Cairn Energy, Ted Baker, Balfour Beatty and Yule Catto.

Key stats
Market capitalisation£5,865m
No. of shares out1,877m
No. of shares floating1,683m
No. of common shareholdersnot stated
No. of employees48100
Trading volume (10 day avg.)6m
Turnover£21,102m
Profit before tax£640m
Earnings per share33.84p
Cashflow per share58.41p
Cash per share26.77p

*Correct as at 21 Mar 2012

Oriel backs Sainsbury's as sales rise

Jonathan Pritchard, analyst at Oriel Securities, has retained his 'hold' recommendation on supermarket giant J. Sainsbury (SBRY.L) following a rise in sales in the latest quarter.

Like-for-like (LFL) sales excluding fuel rose 2.6% on the previous year in the 10 weeks to 17 March, pushing LFL sales for the year up 2.1%. 'A strong fourth-quarter LFL showing here suggests further market share gains sinceXmas,' Pritchard said.

'We do not think that the market itself has accelerated in the period, so this suggests an increase in the pace of market share gain for Sainsbury (or if you look at it another, an increase in the pace of market share loss for the others).'

Own-label products performed particularly strongly, with sales of the supermarket's Basics range rising 10% over the year and sales of Taste the Difference products up 20%. Sales from the supermarket's convenience stores also impressed, rising 20% over the year.

'The sector is no place for investors to be, but the brave should hold this one,' Pritchard concluded.

Shares in the group closed at 314.90p on Wednesday, up 9.40p or 3.08%.

Key stats
Market capitalisation£1,884m
No. of shares out554m
No. of shares floating546m
No. of common shareholdersnot stated
No. of employees1259
Trading volume (10 day avg.)9m
Turnover0m USD
Profit before tax-374m USD
Earnings per share-0.68 USD
Cashflow per share-0.17 USD
Cash per share0.21 USD

*Correct as at 21 Mar 2012

Credit Suisse raises Cairn Energy's target price

Ritesh Gaggar, analyst at Credit Suisse, has increased his target price for oil and gas explorer Cairn Energy (CNE.L) following a number of announcements at the group's 2011 results presentation.

According to Gaggar, the key updates from the presentation were lower-than-expected capital expenditure this year ($90 million compared with previous expectations of $150 million-$200 million), the decision to rebalance the company's portfolio via an acquisition, and plans to sell another Greenland block. The company said that it plans to diversify its operations by acquiring lower-risk assets outside Greenland.

'Although these updates are positive and would help Cairn reduce its 24% discount vs $3.8 billion mark-to-market valuation ($1.2 billion of cash and $2.6 billion of Cairn India stake), we remain Neutral as Cairn is still at an early stage to determine its future,' Gaggar said. The company has so far spent around £750 million trying to locate reserves off the coast of Greenland, but it has yet to find anything commercially viable.

The analyst has increased his target price to 392p from 369p but said 'in the absence of any drilling catalysts, we are happy to stay on the sidelines until we have more clarity over its future growth plans'.

Shares in the group closed at 346.10p on Wednesday, up 4.30p or 1.26%.

More updates from Credit Suisse:

  • Wolseley (WOS.L), 'outperform' (unchanged), target price: £28.50 (was £24.00)
Key stats
Market capitalisation£317m
No. of shares out42m
No. of shares floating25m
No. of common shareholdersnot stated
No. of employees1700
Trading volume (10 day avg.)0m
Turnover£188m
Profit before tax£17m
Earnings per share41.35p
Cashflow per share56.84p
Cash per share32.52p

*Correct as at 21 Mar 2012

Seymour Pierce lifts target price for Ted Baker as sales surge

Freddie George, analyst at Seymour Pierce, has increased his price target for clothing retailer Ted Baker (TED.L) based on 2011 results that beat market expectations.

In the year to the end of January pre-tax profits were virtually in line with 2010, rising 0.1% to £24.3 million. Encouragingly, though, revenues rose 14.9% on the previous year, and sales from the UK website leapt 42.2% to £9.1 million.

However, George said that exceptional costs for the year of £2.8 million were not properly flagged up to the market ahead of the announcement. 'They related to rent for stores on stores not yet opened, set up costs in relation to China and provision for bad and doubtful debts in Greece,' he said.

Summarising his take on the stock, for which he has a price target of 750p, up from 710p previously, George said 'Ted Baker is a relatively safe investment, has a strong balance sheet and as with SuperGroup has a great opportunity to develop its brands on the internet and overseas.'

Shares in the group closed at 775.00p on Wednesday, down 12.50p or 1.59%.

Key stats
Market capitalisation£2,003m
No. of shares out687m
No. of shares floating682m
No. of common shareholdersnot stated
No. of employees50042
Trading volume (10 day avg.)3m
Turnover£9,494m
Profit before tax£182m
Earnings per share26.61p
Cashflow per share46.49p
Cash per share86.57p

*Correct as at 21 Mar 2012

Berenberg Bank raises EPS forecasts for Balfour Beatty

Chris Moore, analyst at Berenberg Bank, has lifted his earnings per share (EPS) projections for construction and engineering business Balfour Beatty (BBY.L) based on planned cost-saving initiatives and improving margins in the group's professional services arm.

Following the group's 2011 results – which showed that pre-tax profits hit £246 million, up from £201 million in 2010 – Moore has increased his 2012 EPS estimate by 8% and his 2013 estimate by 7%. The analyst said that the group's new £50 million cost-saving initiative has not yet been factored into consensus numbers.

'Balfour stated that it was on track to meet its target of £30 million of savings by 2013. It also announced a new plan for a further £50 million of cost savings by 2015, with the 'major portion' coming through in 2013,' he said.

A depressed valuation and strong return on equity are further draws for investors, Moore added.

Moore retains his 'buy' recommendation on the stock, for which he has a target price of 340p. Shares in the group closed at 289.90p on Wednesday, up 3p or 1.05%.

Key stats
Market capitalisation£835m
No. of shares out340m
No. of shares floating270m
No. of common shareholdersnot stated
No. of employees1872
Trading volume (10 day avg.)1m
Turnover£1,117m
Profit before tax£33m
Earnings per share9.60p
Cashflow per share22.66p
Cash per share30.39p

*Correct as at 21 Mar 2012

Morgan Stanley 'overweight' on Yule Catto on growth outlook

Paul Walsh, analyst at Morgan Stanley, has lifted his price target for British-based chemicals business Yule Catto & Co (YULC.L) based on potential efficiency gains following its acquisition of PolymerLatex and what he believes is a promising growth outlook.

The analyst said 'increased synergy targets on PolymerLatex, improving demand in the first half of 2012 following de-stocking in the second half of 2011 and a more optimistic view on medium-term growth driven by an accelerating capex programme' all supported his upgrade.

The analyst has an 'overweight' recommendation on the stock, and has increased his target price to 330p from 270p previously.

The analyst has an 'overweight' recommendation on the stock, and has increased his target price to 330p from 270p previously.

Shares in the group closed at 242.51p on Wednesday, up 3.71p or 1.55%.

More updates from Morgan Stanley:

  • SOCO International (SIA.L), 'underweight' (unchanged), target price: 335p (was 340p)
  • Genel Energy (GENL.L), 'equal weight' (unchanged), target price: 880p (was 960p)

More about this:

Look up the shares

  • Balfour Beatty PLC (BALF.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Ted Baker PLC (TED.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • J Sainsbury PLC (SBRY.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Cairn Energy PLC (CNE.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Yule Catto & Co PLC (YULC.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

More galleries

 See all

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

Sorry, this link is not
quite ready yet