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The Expert View: Rentokil, Man Group and Barclays

Our daily roundup of the best analyst commentary on shares, also including International Airlines Group.

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Key stats
Market capitalisation£2,123m
No. of shares out1,823m
No. of shares floating1,798m
No. of common shareholdersnot stated
No. of employees53508
Trading volume (10 day avg.)2m
Turnover£2,327m
Profit before tax£90m
Earnings per share4.94p
Cashflow per share17.74p
Cash per share24.06p

*Correct as at 1 Aug 2014

Peel Hunt warms to Rentokil recovery

Peel Hunt has upgraded British services firm Rentokil (RTO) from 'sell' to 'hold'. Analyst Christopher Bamberry said: ‘[Rentokil] has delivered reduced restructuring costs, better cash flow and 17 bolt-on acquisitions. With the group on the road to becoming a better business we have upgraded our recommendation from "sell" to "hold".’

The pest control to work wear group recorded a 7.7% increase in half-year profit, having pursued a restructuring programme last year. Operating profits increased to £110.2 million with the interim dividend up 10% to 0.77p per share.

Bamberry raised his target price to 114p from 108p adding: ‘In our opinion for the shares to progress further it will require Rentokil to demonstrate that the new strategy can successfully deliver accelerated organic growth as well as its MCA plans.’ The shares closed 1.5% or 1.8p lower on Friday at 116.7p.

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Key stats
Market capitalisation£2,043m
No. of shares out1,756m
No. of shares floating1,607m
No. of common shareholdersnot stated
No. of employees1163
Trading volume (10 day avg.)10m
Turnover687m USD
Profit before tax31m USD
Earnings per share0.02 USD
Cashflow per share0.08 USD
Cash per share0.32 USD

*Correct as at 1 Aug 2014

Man Group downgraded as inflows fall

Panmure Gordon has downgraded Man Group (EMG) from 'buy' to 'hold' due to a drop in Q2 inflows. Analysts Keith Baird and Jeremy Grime said: ‘Equities disappointed. Due to that and the lack of visibility we are reducing our recommendation to "hold".’

Man Group recently underwent restructuring in order to lessen dependence on its AHL fund. While it has recovered by 9%, the firm is struggling.

Although funds under management climbed by 7% to $57.7 billion in the first half, Q2 inflows were 60% down on the first quarter.

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Key stats
Market capitalisation£36,725m
No. of shares out16,417m
No. of shares floating16,283m
No. of common shareholdersnot stated
No. of employees139600
Trading volume (10 day avg.)48m
Turnover£18,315m
Profit before tax£540m
Earnings per share3.40p
Cashflow per share15.27p
Cash per share291.49p

*Correct as at 1 Aug 2014

Cautious optimism for Barclays amid structural concerns

Berenberg upgraded Barclays (BARC) from 'sell' to 'hold' after the bank’s second-quarter results proved better than expected.

Underlying profits fell by 8% as Barclays continued to shrink its investment banking business. The analysts expressed doubts about the organisation’s current makeup, saying: ‘Barclays is yet to justify why it should remain a universal bank.’

Chief executive Anthony Jenkins said he was ahead of target in cutting costs with 14,000 jobs to go this year. The bank also set aside a further £900 million for mis-sold payment protection.

Analysts James Chappell and Eoin Mullany maintained their price target. ‘Unlike some of its peers, Barclays has the ability to break its business up and maximise returns for shareholders while reducing the regulatory burden’, they said.

Barclays’ shares closed 2p lower on Friday at 224p.

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Key stats
Market capitalisation£6,882m
No. of shares out2,038m
No. of shares floating2,029m
No. of common shareholdersnot stated
No. of employees60089
Trading volume (10 day avg.)8m
Turnover14,724m EUR
Profit before tax100m EUR
Earnings per share0.05 EUR
Cashflow per share0.47 EUR
Cash per share1.41 EUR

*Correct as at 1 Aug 2014

BA owner beats forecasts

British Airways owner International Airlines Group (ICAG) has pleased analysts at Jefferies by announcing a 55% increase in second-quarter profits.

Operating profits of €380million (£302m) came in well above the €354million expected, with the group reiterating its guidance that full year profits would grow by at least €500 million. Mark-Irvine Fortescue and Ian Rennardson of Jefferies said the news provides ‘relief for investors’ after competitors Lufthansa and Air France recently issued profit warnings.

The analysts stuck to their ‘buy’ rating and price target of 480p, saying the weak share price was ‘incongruous’.

‘ICAG is not immune from the pricing pressures of industry capacity expansions, but structurally it’s better protected,' they said.

ICAG shares closed 2.75% or 9p higher on Friday at 340p.

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