The Expert View: Hargreaves Lansdown, GSK and Prudential
Our daily roundup of analysts' share recommendations and commentary, also featuring Wincanton and Ladbrokes.
Hargreaves downgraded to ‘hold’ over pricing plan
Jefferies analysts have downgraded Hargreaves Lansdown (HL.L) from a ‘buy’ to a ‘hold’.
Following first quarter results and an announcement that the fund supermarket was u-turning on its investment trust charge, analyst Jason Streets made the downgrade.
However, he did increase the target price of the shares from £11.50 to £12.50 (current price £13.79) as although he is taking a ‘wait and see’ approach in the short term, he still thinks over time Hargreaves will benefit from market growth.
Streets added that he expected Hargreaves to take a hit from the lower amounts of interest it can take from cash accounts due to low interest rates.
‘We have trimmed our forecasts largely due to the continuing impact of extremely low interest rates on interest receivable but we raise our price target to £12.50 as Hargreaves Lansdown’s business grows in market strength…Nevertheless there is no longer sufficient upside for a ‘buy’. We now have to wait and see the impact of [pricing changes].’
Glaxo worth holding on to, says Panmure
Panmure has reiterated its ‘hold’ recommendation for GlaxoSmithKline (GSK.L) on the hope that it will deliver ‘some interesting share price catalysts’ this year.
Analyst Savvas Neophytou placed a target price of £17.50 (current price £15.80) on the shares after preliminary 2013 results were in line expectations and the outlook ‘was modestly better than had been expected’.
However, Neophytou flagged that ‘growth is likely to come from financial engineering rather than significant growth in revenues’, although this has not put him off as ‘the pipeline is primed and should deliver some interesting share price catalysts this year’.
‘For option value alone, it is worth holding on to the shares. We reiterate out ‘hold’ recommendation,’ he said.
Ladbrokes struggles lead to target price downgrade
Bookmaker Ladbrokes (LAD.L) is suffering under the weight of poor sports results and increased taxation, leading Peel Hunt to reduce its target price.
Analyst Nick Batram retained his ‘hold’ recommendation but reduced the target price on the shares from 175p to 144p (current price is 150p).
‘The latest downward adjustment to figures follows guidance given at the recent post-close trading statement,’ he said. ‘Poor sporting results, rising taxation and other events outside of the group’s control are exacerbating the pain caused by the self-inflicted issues within digital.
‘Our ‘hold’ recommendation is based on the yield and recovery potential.’
Prudential’s emerging market fears are overdone, says Barclays
Fears that Prudential (PRU.L) is overexposed to shaky emerging markets have been dismissed by Barclays’ analysts, who reiterated their ‘overweight’ recommendation.
Analyst Alan Devlin placed a target price of £16.18 (current price is £12.64) on the shares and said that the insurer was a ‘compelling’ story due to its US operations benefitting from a rally in the S&P500 and higher US interest rates in 2013.
‘Prudential’s recent weakness has been caused by a focus on negative emerging market sentiment and FX concerns, rather than what we see as the real drivers of Pru’s business,’ he said. ‘In our view, Prudential’s Asian growth and profitability are relatively insulated from economic fluctuations and are driven by long-term structural trends.’
‘Boring’ Wincanton is good for investors
Logistics provider Wincanton (WIN.L) is proving that ‘boring is good’ when it comes to shares, say Investec analysts.
Analyst John Lawson has increased the target price of the shares from 122p to 155p (current price 139p) after ‘another very solid performance’ in Wincanton’s interim management statement.
‘Wincanton has developed consistency and continues to trade in line with expectations,’ said Lawson. ‘We used the phrase ‘boring is good’ in a previous note and while this is an old cliché, it has certainly done wonders for the share price.’
He added that the good performance of the company was no accident and it had ‘worked hard to deliver this improved track record’ and group is ‘slowly but surely chipping away at its high debt levels so in time we might start to think about a dividend again’.