The Expert View: Hargreaves Lansdown, Tesco, Standard Chartered
A round-up of some of the best analyst commentary on shares, also including Brewin Dolphin and Sage.
'Buy' Standard Chartered after poor results
Poor fourth quarter results from Standard Chartered (STAN.L) may have disappointed investors but Investec is still recommending the bank as a ‘buy’.
The bank yesterday told investors that full-year operating profit from its consumer banking unit will be down at least 10%, hurt by a slump in its Korean business.
Analyst Ian Gordon predicts a ‘sharp re-acceleration’ in wholesale banking revenue at Standard Chartered and said the ‘maths appears compelling’, placing a target price of 1900p on the shares.
Investec said it expected to see the bank ‘return to positive jaws next year’, although noted it would not be a straightforward task.
‘[Q4 results] are poor, but the outlook underpinned by a strong pipeline and greater stability, appears robust,’ said Gordon.
Standard Chartered shares suffered a drop of 6.4%, or 92.5p, on Wednesday to end the day ay £13.98.
Weak Tesco (TSCO.L) results doesn’t put analysts off
Investors and analysts weren’t put off by a weak Q3 update from the UK’s largest retailer, with sales no worse than feared.
Jefferies analysts, led by James Grzinic, said the 0.6% Q3 sales growth was slightly ahead of their 0.3% estimate which confirmed ‘the significant headwinds the group has had to contend with, but also the shape of a measured profit recovery in the coming year’.
Grzinic said: ‘With the stock trading at its relative lows, a sizeable yield support and a strengthening cashflow profile. A return to earnings growth in ‘14/15…would likely be accompanied by an attractive multiples expansion.’
Grzinic and team kept their target price of 440p for the shares.
Shares ended Wednesday trade down 1.6p, or 0.46% at 340p
Quality clients make Brewin Dolphin more attractive
Canaccord Genuity has upgraded shares in wealth management firm Brewin Dolphin (BRW.L) from ‘hold’ to ‘buy’ after strong full year results.
Analyst Robin Savage raised his target price for the shares to 304p from 285p after assets under management (AUM) at the wealth manager rose 8.9% to £28.8 billion, and revenues increased 9% to £283.7 million.
Savage said the quality of clients at Brewin Dolphin has helped to improve his view of the company.
‘These results and the accompanying investors presentation confirm that management are on track to meet our forecasts and achieve a 25% margin in 2016.
‘We are particularly impressed by new disclosures which show the quality of Brewin’s AUM: small portfolios under £50,000 account for 1% of AUM and around 250 high-net-worth families, with over £5 million of assets, account for 14% of AUM.’
Brewin shares ended Wednesday at 282p, up 1.4p, or 0.5%
Sage offers ‘little pizzaz’
Investors may have welcomed a dividend hike from accounting software group Sage (SGE.L) but analysts at Panmure Gordon continued to recommend a ‘hold’.
Analyst George O’Connor said the ‘workmanlike set of results hit estimates’, net debt was better than expected, and ‘there is a commitment to grow at 6% in 2015’ but there was ‘very little pizzaz otherwise’.
‘Indeed if this was pizza it would be Margherita rather than American Hot, with an extra drizzle of spicy oil,’ he said.
O’Connor sets a target share price of 347p but said Sage chief executive Guy Berruyer needed to ‘make up your mind’ and ‘either become a great returns or a growth share’.
At close of trading on Wednesday shares were up 7.3%, or 25.5p, at 372p
Hargreaves Lansdown to win-out in platform pricing race
News that Hargreaves Lansdown (HRGV.L) has delayed the announcement of its new pricing structure led Numis analysts to recommend a ‘hold’.
Analyst James Hamilton said the delay would allow the fund supermarket to ‘achieve the best results for their clients’ and that securing cheap fund prices than its competitors would mean a ‘move into [an] even stronger market position’.
‘We believe that this is like Tesco being able to buy product cheaper than James Hamilton corner shops of Aberystwyth,’ said Hamilton. ‘Our forecasts assume that the Hargreaves Lansdown customers get an increasingly better deal as the platform industry moves from a specialist market to a mass market.’
Numis has a the target price for the shares of £10.42 which is below the current share price (Numis rates a share a hold if it believes it will fall or rise up to 9.99%).
Hargreaves shares closed marginally higher yesterday, at £12.14, a gain of 5p or 0.4%