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The Expert View: Tate & Lyle, Dixons Carphone & Standard Life Aberdeen

Our daily roundup of analyst commentary on shares, including WPP and Moneysupermarket.

by Michelle McGagh on Jun 14, 2018 at 05:30

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Key stats
Market capitalisation£3,000m
No. of shares out466m
No. of shares floating458m
No. of common shareholdersnot stated
No. of employees4146
Trading volume (10 day avg.)3m
Profit before tax£444m
Earnings per share55.96p
Cashflow per share88.72p
Cash per share40.80p

Jefferies downgrades Tate as CEO sweetens market

Jefferies has downgraded Tate & Lyle (TATE) as it believes the action on costs and new strategy set out by new chief executive Nick Hampton have been priced in.

Analyst Martin Deboo lowered his recommendation from ‘buy’ to ‘hold’ but increased the target price from 665p to 700p on the stock, which fell 4%, or 27p, to 642p.

‘New chief executive Hampton had made his mark with fresh clarity on strategy and decisive action on cost,’ he said.

‘This has been well rewarded by the share price and a return to price/earnings ratio parity with [US rival] Ingredion. Experience suggests that, when valuation returns to a more normal range, near-term earnings anxiety tends to prevail over longer-term re-rating aspirations.’

Deboo added that full-year 2019 guidance from the company was ‘stretching’ and so he was returning ‘to the sidelines’.

Key stats
Market capitalisation£2,228m
No. of shares out1,158m
No. of shares floating956m
No. of common shareholdersnot stated
No. of employees43883
Trading volume (10 day avg.)6m
Profit before tax£684m
Earnings per share25.20p
Cashflow per share41.30p
Cash per share12.75p

Accendo: Dixons sidesteps hit from data breach

Accendo Markets believes Dixons Carphone (DC) may have avoided too much of a stock market battering after news of a data breach.

Shares in the electricals retailer fell 3.1% on news that 1.2 million customer records, including names, addresses, and emails, have been accessed alongside details of 5.9 million payment cards in its Currys PC World and Dixons Travel processing systems. Although there was no evidence of fraud, analyst Michael van Dulken said ‘that doesn’t make up for the fact that client data was at risk’.

He likened the breach to the one at TalkTalk and said Dixons may have learnt from that lesson ‘taking note of how not to deal with things’.

‘Its shares [were] down only 3% after getting the bad news out early doors,’ he said. ‘In this new era of big data, are we simply resigned to the fact that breaches are more commonplace and may happen, and just hope for the best.’

The shares closed 5.5p down at 192p.

Key stats
Market capitalisation£10,440m
No. of shares outm
No. of shares floatingm
No. of common shareholdersnot stated
No. of employeesnot stated
Trading volume (10 day avg.)10m
Profit before tax£1,181m
Earnings per share29.62p
Cashflow per share36.91p
Cash per share343.28p

‘Significant’ opportunity at Standard Life Aberdeen, says Numis

Numis Securities believes Standard Life Aberdeen (SLA) offers ‘significant value opportunity’ for investors willing to be patient with the fund management giant.

Analyst David McCann retained his ‘buy’ recommendation and target price of 452p on the stock, which eased 1%, or 3.6p, lower to 350.6p.

He updated his forecasts for the return of capital, additional cost savings, and debt and said the market was ‘materially undervaluing Standard Life Aberdeen and we believe it offers a significant value opportunity to patient investors’.

However, he noted that the ‘catalysts may not be short term’ and ‘patient shareholders will be well rewarded after a period of time as further disposals, associated return of capital might be made as the investment cash evolves to that of a pure play asset manager’.

Key stats
Market capitalisation£15,582m
No. of shares out1,262m
No. of shares floating1,218m
No. of common shareholdersnot stated
No. of employees134413
Trading volume (10 day avg.)4m
Profit before tax£2,552m
Earnings per share126.24p
Cashflow per share169.96p
Cash per share188.31p

WPP meeting pleases Liberum

The annual general meeting of WPP (WPP) has reassured Liberum on the prospects for the advertising giant despite the scandal former boss Martin Sorrell finds himself embroiled in.

Analyst Ian Whittaker reiterated his ‘buy’ recommendation and target price of £17.50 on the stock, which eased 7.5p or 0.6% to £12.39.

The group reported a positive four months performance, with revenues up and WPP ‘suggesting strong growth in continental Europe, Latin America, and Asia Pacific’ although Whittaker added that ‘North America showed no improvement in April and is still tough’.

‘Nevertheless, the fact that the four months is now positive, plus signs that media investment, which is the key to WPP’s profitability, is still showing good growth will be seen as reassuring and give more confidence in WPP’s guidance of flat like-for-like revenues,’ he said.

Key stats
Market capitalisation£1,732m
No. of shares out536m
No. of shares floating527m
No. of common shareholdersnot stated
No. of employees631
Trading volume (10 day avg.)2m
Profit before tax£125m
Earnings per share14.40p
Cashflow per share18.21p
Cash per share6.56p

Peel Hunt unfazed by Moneysupermarket scrutiny

Peel Hunt believes Moneysupermarket’s (MONY) acquisition of Decision Technologies, a rival comparison site company, will go ahead despite scrutiny from the Competition and Markets Authority (CMA).

Analyst Malcolm Morgan retained his ‘add’ recommendation and target price of 340p on the stock after the CMA confirmed it would investigate whether the purchase would result in less competition.

‘The decision could either clear the deal or give rise to a longer secondary process,’ he said. ‘Unsurprisingly, Moneysupermarket is expressing confidence that the deal will be approved.’

Morgan downgraded his rating from ‘buy’ to ‘add’ following a share price bounce from post-results lows, and the CMA interest ‘introduces a level of uncertainty over the summer that in our view suggests “add” is the right tone for the moment’.

The shares softened 0.6p to 323.4p

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