The Expert View: Standard Life, SuperGroup, Consort Medical
Our daily roundup of some of the best analyst commentary on shares.
Sweet deal for Standard Life
Standard Life (SL) has sold its Canadian business for £2.2 billion, a surprise deal that pushes the pension and investment group further towards its aim of becoming an asset manager.
Shore Capital analyst Eamonn Flanagan reiterated his ‘hold’ recommendation at 386p per share before the shares jumped 31p or 8% higher to 417p yesterday.
‘The disposal accelerates Standard Life’s strategy of asset gathering and asset management and removes a major exposure of the group’s balance sheet to [interest rate] spread and guarantee risk in our view,’ he said.
‘According to Standard Life the sale enhances its medium-term earnings profile, and combined with the Ignis purchase and the return of capital, should be earnings accretive. In addition, the group expects to maintain its progressive dividend policy.’
While Flanagan expected the market to respond ‘favourably’, he preferred Prudential (PRU) and Legal & General (LGEN) as he said they ‘remained cleaner ways to play the asset management sector’.
SuperGroup a key buy for Peel Hunt
Peel Hunt analyst John Stevenson reiterated his ‘buy’ stance on SuperGroup (SGP) as shares in the fashion retailer soared 13% after a positive first quarter trading statement.
The Superdry brand owner leaped 145p closer towards Stevenson’s price target of £16.50, ending yesterday at £11.63 after revealing a 15.9% increase in sales and forecasting a year of profit growth.
‘Our forecasts are unchanged, although we note good progress in gross margin and the encouraging start to Q2, which is currently trending ahead of expectations,’ said Stevenson.
‘There remain several potential major events ahead, notably the possibility of a China joint venture and the potential to take control of US distribution, the latter of which would have a material positive effect on forecasts. Taken in conjunction with a strong underlying organic growth story and rising cash balance… SuperGroup remains a key buy.’
Tax cut produces upgrade for Consort Medical
Numis analyst Charles Weston upgraded Consort Medical (CSRT) from ‘add’ to ‘buy’ after the drug delivery specialist’s half-year results revealed its effective tax rate this year would be just 16% instead of the normal 21%.
Watson maintained his target price of £11.20 as the shares gained 36.5p or 4% to 951.5p.
‘Consort Medical has announced that trading is in line with expectations, with growth anticipated from existing and new programmes, and the potential for “inorganic opportunities”,’ he said.
‘Consort generates much of its profits from its own intellectual property, and it has today announced that its effective tax rate for the year to April 2015 is expected to be 16% due to the UK’s new patent box tax rules.’
Weston forecast earnings per share would grow 4% next year and by 10% by 2018. He anticipated more good news from the company, adding a potential takeover approach could not be ruled out.