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The Expert View: Barclays, Britvic and Capita

A roundup of some of the best analyst commentary on shares, including African Barrick Gold and Renold.

Our daily round-up of analyst recommendations and commentary, featuring Barclays, Britvic, Capita, African Barrick Gold and Renold.

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Key stats
Market capitalisation£38,981m
No. of shares out12,241m
No. of shares floating10,492m
No. of common shareholdersnot stated
No. of employees139000
Trading volume (10 day avg.)55m
Turnover£20,589m
Profit before tax£3,007m
Earnings per share24.01p
Cashflow per share40.26p
Cash per share876.25p

*Correct as at 14 Feb 2013

Investec downgrades Barclays

It's time to take a breather following the rapid rise in Barclays (BARC.L) shares, according to Investec analyst Ian Gordon, who has downgraded the bank from 'buy' to 'hold'.

The shares have gained 119% since their July 2012 lows, Gordon noted, and now seems like a good time to take stock. 'On 0.4x tangible net asset value, one did not need to believe that return on total equity would reach 13% by 2015 to own them, but we now see the risk/reward as more balanced,' he said.

'Barclays remains (by far) our preferred UK domestic bank, but we take a breather.' The analyst's target price rises from 320p to 340p based on reduced regulatory aggression of late, but the recent rise means there's still not enough upside left to justify a 'buy'.

Barclays is a member of Citywire Top Stocks through its top 10 position in the Standard Life Investments UK Equity Unconstrained fund run by Edward Legget. Shares in Barclays closed at 320p on Thursday, down 5.8p or 1.8%.

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Key stats
Market capitalisation£937m
No. of shares out242m
No. of shares floating223m
No. of common shareholdersnot stated
No. of employees3337
Trading volume (10 day avg.)1m
Turnover£1,256m
Profit before tax£57m
Earnings per share22.37p
Cashflow per share39.48p
Cash per share20.49p

*Correct as at 14 Feb 2013

Canaccord trims target price for Britvic

Canaccord analyst Wayne Brown has trimmed his target price for Britvic (BVIC.L) after shares in the soft drinks maker plunged on Wednesday's news that the planned merger with AG Barr is to be referred to the Competition Commission.

Brown said the OFT's decision to refer the merger on the grounds that it raised competition concerns about the loss of competitive constraint from some of Britvic's brands on Barr's IRN BRU and Orangina brands was puzzling.

'With Britvic’s brands not directly competing with Irn-Bru in its niche category, this decision is perplexing,' he said. In terms of the impact on investors, the analyst said it was too early to tell, but the deal will be delayed by six-12 months at any rate.

Brown retains his 'hold' recommendation, but his target price falls 7% to 380p.

Shares in the group closed at 387.8p on Thursday, down 32.2p or 7.7%.

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Key stats
Market capitalisation£5,385m
No. of shares out654m
No. of shares floating647m
No. of common shareholdersnot stated
No. of employees46500
Trading volume (10 day avg.)2m
Turnover£2,930m
Profit before tax£238m
Earnings per share39.07p
Cashflow per share61.75p
Cash per share12.15p

*Correct as at 14 Feb 2013

'Sell' Capita, Cantor Fitzgerald says

Cantor Fitzgerald analyst Caroline de La Soujeole has reiterated her 'sell' recommendation on Capita (CPI.L), warning it's going to come under increasing pressure as rivals of all sizes scour the outsourcing spectrum for potential deals.

The analyst's comments come amid news that Capita has made another acquisition, picking up infrastructure and managed services business Northgate Managed Services for £65 million. However, this doesn't alter de La Soujeole view that Capita is about to find itself squeezed.

'The analysis we conducted on changes in the outsourcing spectrum in our January 2013 Annual Support Services Review Keep calm and carry on outsourcing identified Capita as the company most likely to suffer from increased convergence in the outsourcing industry,' she said.

'There is increased evidence of blue collar facilities management companies moving up the outsourcing spectrum whilst IT service companies are moving down the food chain, squeezing Capita in the middle.'

Shares in the group closed at 820p on Thursday, down 11p or 1.3%.

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Key stats
Market capitalisation£1,265m
No. of shares out410m
No. of shares floating105m
No. of common shareholdersnot stated
No. of employees5379
Trading volume (10 day avg.)1m
Turnover778m USD
Profit before tax176m USD
Earnings per share0.43 USD
Cashflow per share0.65 USD
Cash per share0.91 USD

*Correct as at 14 Feb 2013

Westhouse trims target price for African Barrick Gold

A poor start to the year for miner African Barrick Gold (ABG.L) has prompted Westhouse analyst Rob Broke to cut his target price to 255p from 305p.

'Despite updating the market in the Q4 production report that it would be rebasing production levels to those seen in 2012, ABG has effectively lowered last month’s guidance by 26,500-86,500 ounces to 540-600,000 ounces in 2013,' Broke said.

'As we noted last month, with no production growth in the short term, and with a wide array of issues to address, things are going to get worse before they get better. While doubt remains over the base production level, let alone future growth, there is little to recommend the stock.' Broke has a 'sell' recommendation on the shares.

Shares in the group closed at 308p on Thursday, up 6.5p or 2.1%.

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Key stats
Market capitalisation£56m
No. of shares out221m
No. of shares floating213m
No. of common shareholdersnot stated
No. of employees2569
Trading volume (10 day avg.)0m
Turnover£210m
Profit before tax£6m
Earnings per share2.82p
Cashflow per share5.01p
Cash per share2.19p

*Correct as at 14 Feb 2013

Renold's sales slip

Finncap analyst David Buxton has warned that shares in engineering group Renold (RNO.L) are likely to suffer following a disappointing trading update.

The group’s third-quarter update highlighted weak demand in its chain division, with order deferral also affecting torque transmission. Overall revenues declined by 8.7% in the four months, with a year-to-date reduction of 6.9%.

'With a significant downgrade the shares trade on a price to earnings ratio of 19.4x that looks overvalued,' Buxton said. 'The shares had been running ahead of themselves on hopes of a management turnaround.' The analyst has a 'hold' recommendation on the shares.

Shares in the group closed at 25p on Thursday, down 3.3p or 11.5%.

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