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The Expert View: Standard Chartered, Serco and Wood Group
A roundup of some of the best analyst commentary on shares, also including Ophir Energy and Man Group.
by Harry Brooks on Mar 06, 2013 at 05:01
Our daily round-up of analyst recommendations and commentary, featuring Standard Chartered, Serco, Wood Group, Ophir Energy and Man Group.
Investec cheers record results at Standard Chartered
Another positive set of results from Standard Chartered (STAN.L) shows why its Investec analyst Ian Gordon's preferred pick in the sector.
Despite being hit by a £448 million fine for breaking sanctions against Iran, pre-tax profits were slightly up on last year at £4.5 billion. Income rose 8% to £12.6 billion.
'2012 has been an ''interesting'' year for Standard Chartered, though it bows out in style posting a 10th consecutive record year of income and profits,' Gordon said.
'Moreover, as currency headwinds morph into tailwinds, we expect delivery in 2013 to be a walk in the park... Quality results from a quality bank. STAN is our top pick. Buy.'
Shares in the group closed at £18.30 on Tuesday, up 50p or 2.8%.
Dividend surprise for Serco investors
Shore Capital analyst Robin Speakman has reiterated his 'buy' recommendation on outsourcing firm Serco (SRP.L) after it announced it was lifting its dividend by 20%.
Speakman said good visibilty at the firm meant the results (pre-tax profits up 6% to £278.1 million) were pretty much as predicted, but the dividend move was unexpected.
'The surprise is in the dividend where Serco has relaxed its payout policy to reduce cover from the abour 4.7x level, increasing the payout by 20% to 10.1p (our forecast 8.9p) – Serco is also signaling a higher payout ratio in future, a pleasing development then,' he said.
'We believe that the company is evolving a stronger business model and proposition with a more solid foundation for future growth and development for the long term.'
Shares in the group closed at 632p on Tuesday, up 53.3p or 9.2%.
Canaccord backs 'reassuringly dull' Wood Group
Canaccord analyst James Evans has reiterated his 'buy' recommendation on oil and gas industry supplier Wood Group (WG.L) following what he called a 'reassuringly dull' set of annual results.
Revenues over the year were up 20% to $6.8 billion, and pre-tax profits came in at $362.7 million, up 43%. The total dividend of 17 cents per share is up 26%.
'Given the recent run of poor updates from across the sector, we think the results and guidance should reassure investors and demonstrate the strength of the underlying business,' Evans said.
'Wood currently trades on 11.3x price to earnings for 2013 and just 10x for 2014, a marginal discount to its closest peer AMEC, where we feel a premium is warranted.'
Shares in the group closed at 824p on Tuesday, up 66p or 8.8%.
Ophir to raise £553 million
Nomura analyst Tom Robinson has reiterated his 'buy' recommendation on Ophir Energy (OPHR.L) following news that it's to raise £553 million from a share placement to fund African drilling.
The move had been expected since the company said in October that it plans to spend $650 million drilling in 2013, compared with cash reserves of just over $200 million.
Robinson said the move would put Ophir on a surer footing. 'Our upgrade earlier this year was predicated on securing financing. Arguably, it has come at a greater cost, but we believe it does not detract from what remains one of the most attractive exploration stories in our exploration and production coverage universe,' he said. The analyst has a target price on the shares of 727p.
Shares in the group closed at 511p on Tuesday, up 50p or 10.7%.
Jeffries cuts Man Group to 'underperform'
Jeffries analyst Jason Streets has downgraded alternative investment management business Man Group (EMG.L) from 'hold' to 'underperform'.
'We had held back lowering our rating ahead of the FY12 results in case therewere positive surprises. There were none in our view,' he said. Funds under management fell to $57 billion at the end of December, down 2.4% on the previous year, with AHL, its computer-driven business, down 31%.
'AHL drives Man's profitability not only because of its high revenue margins but also because of its high operating margins too. This makes it exceptionally difficult to replace,' Streets said.
'The trend in AHL assets is remorselessly downwards with the first two months of 2013 seeing an estimated 7.4% outflow - following a sequence of monthly outflows going back to July 2011.'
Shares in the group closed at 98p on Tuesday, up 2.4p or 2.5%.
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Look up the shares
- Ophir Energy PLC (OPHR.L)
- Man Group PLC (EMG.L)
- Serco Group PLC (SRP.L)
- John Wood Group PLC (WG.L)
- Standard Chartered PLC (STAN.L)