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The Expert View: Hargreaves Lansdown, GSK and Prudential

Our daily roundup of analysts' share recommendations and commentary, also featuring Wincanton and Ladbrokes. 

Our daily round-up of analyst recommendations and commentary, featuring Hargreaves Lansdown, GlaxoSmithKline, Ladbrokes, Prudential and Wincanton.

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Key stats
Market capitalisation£6,579m
No. of shares out474m
No. of shares floating206m
No. of common shareholdersnot stated
No. of employees731
Trading volume (10 day avg.)1m
Profit before tax£148m
Earnings per share31.44p
Cashflow per share31.93p
Cash per share37.60p

*Correct as at 6 Feb 2014

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].’

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Key stats
Market capitalisation£77,083m
No. of shares out4,857m
No. of shares floating4,851m
No. of common shareholdersnot stated
No. of employees98681
Trading volume (10 day avg.)8m
Profit before tax£4,565m
Earnings per share91.50p
Cashflow per share124.05p
Cash per share86.99p

*Correct as at 6 Feb 2014

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.

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Key stats
Market capitalisation£1,393m
No. of shares out919m
No. of shares floating904m
No. of common shareholdersnot stated
No. of employees14463
Trading volume (10 day avg.)5m
Profit before tax£190m
Earnings per share20.65p
Cashflow per share26.62p
Cash per share2.14p

*Correct as at 6 Feb 2014

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.’

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Key stats
Market capitalisation£32,071m
No. of shares out2,561m
No. of shares floating2,551m
No. of common shareholdersnot stated
No. of employees27619
Trading volume (10 day avg.)6m
Profit before tax£2,163m
Earnings per share85.02p
Cashflow per share-9,999,999.00p
Cash per share239.56p

*Correct as at 6 Feb 2014

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.’

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Key stats
Market capitalisation£169m
No. of shares out122m
No. of shares floating113m
No. of common shareholdersnot stated
No. of employees16000
Trading volume (10 day avg.)0m
Profit before tax£10m
Earnings per share8.41p
Cashflow per share28.81p
Cash per share72.47p

*Correct as at 6 Feb 2014

‘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’.

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