The Expert View: Hargreaves Lansdown, Tullow Oil and Diageo
A roundup of some of the best analyst commentary on shares, including SSE and BT Group.
Canaccord upgrades Hargreaves Lansdown to 'buy'
Fund supermarket Hargreaves Lansdown (HL.L)'s strong interim results have spurred Canaccord analyst Robin Savage to upgrade the group to 'buy'.
Half-year results showed a 30% leap in pre-tax profits to £93.7 million on revenues 24% higher at £140.3 million. Assets under administration (AuA) were up 30% to £30.4 billion.
'While 1H13 profit is very close to our forecast, 1H13 revenues is £2 million higher and importantly AuA are £1.5 billionn (ie. 4%) above our expectations and the equity market has been very strong year to date,' Savage said.
Shares in the group closed at 796.5p on Wednesday, up 62p or 8.4%.
Production woes offset exploration success for Tullow Oil, Investec says
Investec analyst Brian Gallagher has reiterated his 'sell' recommendation on Tullow Oil (TLW.L) ahead of next Wednesday's annual results.
The analyst said the results aren't likely to contain any real surprises, but should give investors a better idea of what the management plan to do with Ghana's Jubilee oil field, which remains a source of trouble for the group.
'Jubilee’s ramp-up has continued to disappoint and at the update we expect Tullow to focus on debottlenecking plans and a possible 2013 exit rate in excess of 130 million barrels of oil a day,' Gallagher said.
Although the analyst said exploration in Mauritania and Norway could lift Tullow, its involvement in oil production is a big negative as far as he's concerned.
'We continue to view Tullow as increasingly levered to its production business negating the quality of its exploration portfolio. As a result, we reiterate Sell and our £10 sum of the parts-derived target price ahead of the event.'
Shares in the group closed at £12.07 on Wednesday, up 23p or 2%.
JPM bumps up target price for Diageo
Diageo (DGE.L)'s still delivering the goods, according to JP Morgan analyst Matthew Webb, with its strategy of stepping up its exposure to growth markets bearing fruit.
In the six months to the end of December organic sales rose 5% year-on-year, with profits up 9%. This was in line with consensus estimates in terms of sales, and the profit figure was slightly ahead, Webb said.
However, there still are other drinks makers he prefers. 'We continue to prefer the fundamental investment case at SABMiller, Diageo’s main London-listed peer,' he said.
'However, we note that SABM’s recent outperformance (+8% since mid-January versus Diageo +3%) has expanded SABM’s price-to-earnings premium versus Diageo to 11% which some might consider full given what are currently fairly similar profit growth profiles.'
The analyst's target price rises from £17.75 to £19.15.
Shares in the group closed at £18.77 on Wednesday, up 0.6p.
SSE sells wind farms
SSE (SSE.L)'s decision to sell some of its wind farms is a good one, according to Seymour Pierce analyst Angelos Anastasiou, who has a 'hold' recommendation on the shares.
The power firm has agreed to sell four wind farms with a total generation capacity of 79.5MW to a new fund managed by Greencoat Capital for £140 million. As part of the deal SSE will enter into power purchase agreements (PPA) for three of the wind farms and will continue to run and maintain all four facilities.
'The proceeds from these disposals will support our investment in new renewable assets in the coming financial year,' SSE's finance director Gregor Alexander said. Anastasiou agreed that the sale was a good move, although he noted that the money it'll raise isn't much in the context of net debt that he estimates to have hit about £7.2 billion at the end of March.
Shares in the group closed at £14.09 on Wednesday, down 5.4p or 0.4%.
BT's still on track, Berenberg Bank says
Berenberg Bank analyst Stuart Gordon has reiterated his 'buy' recommendation on BT Group (BT.L) and increased his target price on the back of healthy growth and continued cost-cutting.
'BT continues to positively deliver in terms of earnings and earnings per share growth, which sets it aside from the bulk of the other names in the telecoms segment,' Gordon said.
The analyst noted that BT has already identified the next round of cost savings, with more details on the anticipated savings to be announced with the annual results in May. The group continues to gain broadband subscribers, with 122,000 new retail consumers signing up in the latest quarter.
'With this positive momentum leading to some modest upgrades to our numbers, we lift our price target by 20p to 280p and reiterate our Buy recommendation,' he added.
Shares in the group closed at 272.7p on Wednesday, up 3.8p or 1.4%.