The Expert View: ITV, RBS & WS Atkins
A roundup of the best analyst commentary on stocks, including Johnson Matthey and Boohoo.com.
ITV, a World Cup winner, says Liberum
A plateau in the share price recently makes ITV (ITV) a keen buy, particularly as it looks set to profit from World Cup fever.
Liberum analyst Ian Whittaker reiterated his ‘buy’ rating on the shares and target price of 255p.
ITV is Whittaker’s ‘top pick in media’ and he believes the current share price is a good buying opportunity.
‘While we like it for long-term, fundamental reasons, shorter-term advertising trends also provide a catalyst,’ he said. ‘In this context, the suggestions that advertising momentum is improving around the World Cup should help.
‘The shares have flat-lined recently after what was perceived as a ‘disappointing’ Q1…However, the ITV story still very much holds, ie, it is in a fundamentally strong position, with changes to the UK TV landscape… likely to benefit ITV significantly while its net cash position offers flexibility for cash returns and/or selective acquisitions.’
The shares closed 2.8p or 1.6% up at 179.4p yesterday.
RBS downgraded on share price correction fears
Investec analyst Ian Gordon has downgraded RBS (RBS) as he believes the spike in the share price is due for a correction.
Gordon downgraded his rating for the bank from ‘hold’ to ‘sell’ but retained a target price of 325p.
‘Following RBS’ latest +16% six-week “spike” we believe that the share price – once again – reflects a triumph of hope over reality and should duly correct,’ he said.
Gordon expects RBS to deliver ‘a solidly loss-making performance through Q2-Q4’ and that net asset value per share will fall to a ‘new low of 361p’ by the end of the year and a further decline to 352p in 2015.
‘Based on our interpretations of [RBS] guidance, it would appear that RBS management broadly agrees with us! Time to reinstate shorts,’ said Gordon.
The shares closed yesterday virtually unchanged at 340.3p.
Atkins recovery could lead to double-digit growth
Engineering and design consultancy WS Atkins (ATK) has made good progress in the past year and Peel Hunt analysts predict double-digit growth in future.
Analyst Christopher Bamberry retained a ‘buy’ rating and target price of £15.85 on the back of full-year 2014 preliminary results.
‘Prelims were in line with profit before tax, +7%. Organic revenue growth should accelerate rapidly as the recovery in Atkins main end-markets broadens. Furthermore, the 8% medium-term margin target looks increasingly deliverable,’ he said.
‘Therefore, with the potential for double-digit organic profits growth over the medium term, which may well be supplemented by bolt-on acquisitions, we retain our "buy" recommendation.’
The shares slipped 8p or 0.6% to close yesterday at £13.18.
Numis upgrades Johnson Matthey as prospects improve
Chemicals specialist Johnson Matthey (JMAT) has been ungraded after its full-year results beat expectations.
Numis analyst Charles Pick upgraded the stock from ‘hold’ to ‘add’ and increased the target price from £34.70 to £36.42.
Full-year 2013/14 results profit before tax came in at £427.3 million, above consensus forecasts of £420 million and although the company will face some struggles this year, it is set for more good results.
‘Johnson Matthey faces some major headwinds this full year, largely due to foreign exchange and a full 12 months' impact from the revised Anglo Platinum contracts,’ said Pick. ‘However, a ‘broadly in line’ result has been indicated and this implies an expectation of underlying double-digit growth.’
The shares yesterday shed 29p or 0.9% to close at £32.18.
Newly floated Boohoo impresses with maiden results
In its first trading statement since floating in March, online clothing retailer Boohoo.com (BOO) has shown its promise, according to Jefferies analyst David Reynolds.
Reynolds retained a ‘buy’ rating and target price of 68p as earnings before interest, taxation, depreciation and amortisation came in at a better-than-expected £16 million in the first quarter.
He said there had been ‘much progress on product range, customer experience, international expansion’ and ‘Boohoo’s difference in terms of own brand, test and repeat, focused advertising and zonal pricing stand the business in good stead’.
Reynolds added that Australian currency headwinds could ‘weigh’ on the company but overall he saw ‘revenue expectations for full-year 2015 centred on +45% year-on-year growth’.
The shares added 2.5p or 5.4% to close yesterdat at 48.5p.