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The Expert View: Ryanair, Aveva and Carillion

Our daily roundup of the best analyst commentary on shares, also including Vectura and Lancashire.

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Key stats
Market capitalisationN/A
No. of shares outN/A
No. of shares floatingN/A
No. of common shareholdersN/A
No. of employeesN/A
Trading volume (10 day avg.)N/A
TurnoverN/A
Profit before taxN/A
Earnings per shareN/A
Cashflow per shareN/A
Cash per shareN/A

*Correct as at 9 Apr 2014

Ryanair to soar this summer; wins upgrade

Barclays is expecting a bumper summer and a bounce-back in winter fares for Ryanair (RYA.L), winning the budget airline an upgrade.

Analyst Oliver Sleath upgraded the airline from ‘equal weight’ to ‘overweight’ and placed a target price of €8.60 on the shares, which were trading up 3.4% at €7.62 yesterday.

‘Based on our in-depth analyst of the latest published airline schedules, we believe Ryanair will positive surprise on pricing, load factor and ancillaries this summer; we also expect a bounce-back in fares next winter,’ said Sleath.

‘Our new full year 2015 earnings per share forecast is 11% ahead of consensus, and we upgrade our rating from “equal weight” to “overweight”.’

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Key stats
Market capitalisation£1,276m
No. of shares out64m
No. of shares floating63m
No. of common shareholdersnot stated
No. of employees1317
Trading volume (10 day avg.)0m
Turnover£220m
Profit before tax£45m
Earnings per share71.09p
Cashflow per share81.46p
Cash per share85.26p

*Correct as at 9 Apr 2014

Aveva share price fall makes it a ‘buy’ for Panmure

Engineering software provider Aveva (AVV.L) has been upgraded to a ‘buy’ by Panmure, the first since October 2011.

Analysts George O’Connor and Adam Lawson upgraded their recommendation from ‘hold’ to ‘buy’ and placed a target price of £21.99 on the shares, which traded up 43p, or 2.2%, at £19.96 yesterday.

The basis for the recommendation was the share price falling below £20, the first time it had done so since October 2012.

‘Shares are not the cheapest…but we are relaxed with our slightly below mid-point estimates,’ they said. ‘However given a strengthening operational backdrop and the potential upside from E3D (Everything3D, Aveva’s 3D engineering arm) we are delighted with the opportunity to upgrade our recommendation from ‘hold’ to ‘buy’.’

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Key stats
Market capitalisation£583m
No. of shares out400m
No. of shares floating390m
No. of common shareholdersnot stated
No. of employees216
Trading volume (10 day avg.)1m
Turnover£31m
Profit before tax£-6m
Earnings per share-1.77p
Cashflow per share0.42p
Cash per share20.96p

*Correct as at 9 Apr 2014

Investec downgrades Vectura as it ‘ponders’ the stock

Investec has downgraded biotech firm Vectura (VEC.L) as a new acquisition presents an ‘evolving opportunity’ but the analysts believe it is ‘time to ponder’ the stock.

Analyst Nicholas Keher downgraded his recommendation from ‘buy’ to ‘hold’ but retained a target price of 170p. Yesterday, shares in the company, which delivers pulmonary drugs, were trading down 3p, or 2%, at 147p.

‘We think the acquisition of [German pharmaceutical company] Activaero provides Vectura with an opportunity to become a greater force in the respiratory market with a self-sustaining model capable of developing and commercialising pipeline assets to retain greater value in-house,’ he said.

‘However, we also identify risks, both short and long term, on which we require greater clarity and with potentially long commercial timelines, we think investors can wait for now.’

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Key stats
Market capitalisation£1,635m
No. of shares out430m
No. of shares floating410m
No. of common shareholdersnot stated
No. of employees38824
Trading volume (10 day avg.)2m
Turnover£3,333m
Profit before tax£100m
Earnings per share23.20p
Cashflow per share34.87p
Cash per share96.70p

*Correct as at 9 Apr 2014

Carillion’s good value attracts Cantor upgrade

Pressures on support services company Carillion (CLLN.L) are receding, leading to an upgrade by Cantor Fitzgerald analysts.

Analysts Caroline do La Soujeole and Sam Thomas upgraded their recommendation from ‘hold’ to ‘buy’ and increased the target price from 350p to 420p. The shares were trading up 19p, or 5.3%, at 379.4p yesterday.

‘We upgrade to ‘buy’ given our belief that pressures on the top-line are receding; the company’s substantial order book provides excellent revenue visibility and cash flow performance should also improve in full year 2014 and beyond,’ she said.

They added that Carillion was ‘attractively valued’ compared to its peer group with a discount of around 20% discount and offering ‘one of the highest dividend yields in the sector’.

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Key stats
Market capitalisation£1,294m
No. of shares out183m
No. of shares floating180m
No. of common shareholdersnot stated
No. of employees103
Trading volume (10 day avg.)1m
Turnover384m USD
Profit before tax133m USD
Earnings per share0.70 USD
Cashflow per share0.74 USD
Cash per share1.32 USD

*Correct as at 9 Apr 2014

Lancashire share weakness makes it a ‘buy’ for Espirito Santo

Espirito Santo Investment Bank has upgraded insurer Lancashire (LRE.L) on recent share price weakness.

Analyst Sarah Lewandowski upgraded her recommendation from ‘neutral’ to ‘buy’ and put a ‘fair value price’ of 780p on the shares. The shares were trading up 18p, or 2.6%, at 706p yesterday.

‘Year to date Lancashire’s total return is down 13%, the weakest performer in the sector, with the Lloyd’s average return being -3%,’ she said. ‘We are upgrading our recommendation…on the belief that Lancashire has been unfairly penalised since reporting results that were in line with expectations.’

She said neither the special dividend nor reduced profit before tax was ‘indicative of anything sinister’ despite the negative reaction of markets.

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