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The Expert View: Shell, ITV and St James’s Place

Our daily roundup of analyst views on shares, also including Taylor Wimpey and Sky.

by Michelle McGagh on Mar 01, 2018 at 05:00

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£145,250m
No. of shares out6,312m
No. of shares floating6,301m
No. of common shareholdersnot stated
No. of employees97000
Trading volume (10 day avg.)4m
Turnover237,577m USD
Profit before tax27,007m USD
Earnings per share2.12 USD
Cashflow per share3.79 USD
Cash per share1.41 USD

Shell: most sustainable in the sector, says Jefferies

Restructuring at oil giant Royal Dutch Shell (RDSa) is leaving it well positioned for the medium-term but also offers ‘compelling’ long-term opportunities for investors, says Jefferies.

Analyst Jason Gammel retained his ‘buy’ recommendation but upgraded the target price from £28.90 to £31.80. The shares were trading at £23 yesterday.

‘The restructuring of the Shell portfolio leaves it well positioned for the medium term,’ he said. ‘In the near term, the driver of the stock will be delivery of the well-defined financial targets from each of Shell’s businesses.’

He added that Shell also offers ‘compelling opportunity for long-term investors’.

‘Shell has one of the most sustainable business models in the sector, capable of fully funding the dividend with free cashflow when oil prices are at the bottom of the cycle but also generating strong free cashflow in a moderate oil price environment,’ said Gammel.

Key stats
Market capitalisation£6,454m
No. of shares out4,025m
No. of shares floating3,608m
No. of common shareholdersnot stated
No. of employees6121
Trading volume (10 day avg.)13m
Turnover£3,064m
Profit before tax£888m
Earnings per share11.14p
Cashflow per share14.22p
Cash per share13.94p

Medium-term attractions at ITV, says Shore Capital

Broadcaster ITV (ITV) has an ‘unrivalled’ ability to deliver a mass-market audience to advertisers and attractive income prospects, according to Shore Capital.

Analyst Roddy Davidson retained his ‘buy’ recommendation following final results, the first under new chief executive Carolyn McCall.

The full-year dividend was increased 8% to 16p although the broadcaster did not announce a special dividend, the first time in five years that it has failed to do so. The shares fell 7.6% to 160p on the news.

Davidson said there had been a ‘solid performance’ and he expected the broadcaster to benefit from an improved backdrop.

‘More broadly, we are positive on ITV’s medium-term attractions, including... its unrivalled ability to deliver a mass market commercial audience to advertisers via a trusted [and] well-understood medium,’ he said.

Davidson noted ‘the scale and commercial value of its content portfolio’, as well as ‘the prospect of attractive income progression and strong cash generation... and its value as a strategic asset within a consolidating industry’.

Key stats
Market capitalisation£6,102m
No. of shares out529m
No. of shares floating493m
No. of common shareholdersnot stated
No. of employees1735
Trading volume (10 day avg.)2m
Turnover£11,355m
Profit before tax£497m
Earnings per share21.34p
Cashflow per share23.33p
Cash per share65.58p

Numis upgrades SJP on ‘robust’ full year figures

Numis has upgraded St James’s Place (SJP) on ‘robust’ full-year results after a period of share price weakness.

Analyst David McCann upgraded his recommendation from ‘add’ to ‘buy’ with a target price of £14.30 on the shares, which jumped 2.6% to £11.54 yesterday.

He said the results were ‘another robust set of figures with strong growth demonstrated’.

‘With the shares having been weak recently, in contrast to these robust figures, we upgrade our recommendation,’ said McCann.

‘We continue to hold SJP in very high regard and believe it should continue to be a core long-term sector holding for many investors. We believe that the business will continue to demonstrate that it is one of the most consistent and resilient asset gathers, and retainers, regardless of the economic conditions.’

Key stats
Market capitalisation£6,454m
No. of shares out4,025m
No. of shares floating3,608m
No. of common shareholdersnot stated
No. of employees6121
Trading volume (10 day avg.)13m
Turnover£3,064m
Profit before tax£888m
Earnings per share11.14p
Cashflow per share14.22p
Cash per share13.94p

Liberum upgrades Sky on Comcast bid

Liberum has upgraded Sky (SKYB) which it believes will accept a bid from Comcast.

Analyst Ian Whittaker upgraded his recommendation from ‘hold’ to ‘buy’ and increased the target price from 970p to £12.50, matching Comcast’s offer.

Comcast’s bid is a 16% to the previous Fox bid but Whittaker does not expect Rupert Murdoch’s Fox to enter into a bidding war for Sky, despite the fact it has secured better, and cheaper, Premiership football rights.

‘We expect [the Comcast] deal to go through as we do not think Fox - or Disney, who are acquiring the Sky assets as part of their purchase of various Fox assets - will want to get into a bidding war, especially given the complications surrounding Sky News,’ he said.

Whittaker added that Sky investors would ‘obviously be attracted’ by the bid offer and for many, ‘the Comcast bid may be more attractive even if Fox does come back with a raised bid as it would come with much lower regulatory risk’.

Key stats
Market capitalisation£6,088m
No. of shares out3,276m
No. of shares floating3,249m
No. of common shareholdersnot stated
No. of employees4673
Trading volume (10 day avg.)11m
Turnover£3,676m
Profit before tax£767m
Earnings per share17.95p
Cashflow per share18.05p
Cash per share13.77p

Hold onto Taylor Wimpey for profit growth

Housebuilder Taylor Wimpey (TW) has delivered in-line full-year results and Peel Hunt is predicting further profit growth this year.

Analyst Gavin Jago retained his ‘hold’ recommendation and target price of 210p after the group posted an 11% increase in profit before tax to £812 million. The shares were down 4% at 186p yesterday.

‘The forward order book is in line with the prior year at £2 billion and the group is currently 47% forward sold for full-year 2018,’ he said.

‘The dividend yield is 8%. No change is forecast at this stage and we leave our recommendation as a “hold”.’

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  • Royal Dutch Shell PLC (RDSa.L)
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  • ITV PLC (ITV.L)
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  • St. James's Place PLC (SJP.L)
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  • Taylor Wimpey PLC (TW.L)
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  • Sky PLC (SKYB.L)
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