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The Expert View: Taylor Wimpey, Pace and Rightmove

Our daily roundup of the best analyst commentary on shares, also including Jupiter and Greggs.

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Key stats
Market capitalisation£3,730m
No. of shares out3,253m
No. of shares floating3,211m
No. of common shareholdersnot stated
No. of employees3700
Trading volume (10 day avg.)10m
Turnover£2,296m
Profit before tax£240m
Earnings per share7.32p
Cashflow per share7.40p
Cash per share3.26p

*Correct as at 30 Jul 2014

Taylor Wimpey benefiting from housing boom but fairly priced

First-half results from house builder Taylor Wimpey (TW) show that while the company will continue to benefit from the housing boom this has already been priced into the shares.

Panmure Gordon analyst Rachel Applegate reiterated a ‘hold’ recommendation and target price of 116p after the company reported H1 profits before tax came in 63% higher than the same period last year and a new set of medium term financial targets were announced. Shares dipped 1.8% to 112.6p yesterday.

‘Whilst we believe the business will continue to do well against a supportive market backdrop, we believe that the valuation is up with events for now,’ she said.

‘We see no reason why the market should not return to a more normal upturn in September. This should enable Taylor Wimpey to deliver its financial targets in the period 2015-2017.’

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Key stats
Market capitalisation£1,057m
No. of shares out315m
No. of shares floating284m
No. of common shareholdersnot stated
No. of employees1947
Trading volume (10 day avg.)1m
Turnover1,457m USD
Profit before tax57m USD
Earnings per share0.18 USD
Cashflow per share0.38 USD
Cash per share0.06 USD

*Correct as at 30 Jul 2014

Steady Pace gathers momentum

Half-year results for set-top box developer Pace (PIC) show ongoing momentum but recent trading has promoted Jefferies to cut its target price.

Analyst Lee Simpson retained a ‘buy’ rating but cut the target price from 467p to 425p.

‘Pace’s H1 2014 results suggest ongoing momentum in the core business with a decent guide for the year,’ he said. ‘The firm expects US business strength in H2 and has now completed the integration of Aurora. Gross margin is ahead of last year. We maintain our ‘buy’ rating but cut our target price to 425p in line with recent trading.’ Shares fell 6.7% to 337.5p yesterday on the results.

Simpson added he had concerns over the departure of chief financial officer Roddy Murray which ‘many temper enthusiasm’ but overall ‘the core market is an interesting place’.

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Key stats
Market capitalisation£527m
No. of shares out101m
No. of shares floating98m
No. of common shareholdersnot stated
No. of employees20179
Trading volume (10 day avg.)0m
Turnover£762m
Profit before tax£24m
Earnings per share23.88p
Cashflow per share56.83p
Cash per share24.29p

*Correct as at 30 Jul 2014

Greggs reaps rewards from self-help plan

High-street baker Greggs (GRG) has impressed Shore Capital analyst Clive Black with its focus on self-improvement.

Black retained a ‘hold at 500p’ recommendation after interim results from the company that showed total revenues increased by 3.1% to £373 million. Shares jumped 4.1% to 520.5p yesterday on the news.

‘Greggs is engaged in a period of focus and self-improvement under chief executive Roger Whiteside that has beaten our expectations and impressed us,’ he said. ‘During H1 the group states that it has benefited from more favourable trading conditions and relatively easy comparatives. However, to our minds it is also true to point out that the group has positioned itself better to reap the rewards from these evolving market conditions.’

Black also reiterated upgraded profit and earnings per share estimates but said he retained a ‘hold’ rating as ‘the valuation metrics make for a fairly valued share’.

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Key stats
Market capitalisation£2,241m
No. of shares out99m
No. of shares floating97m
No. of common shareholdersnot stated
No. of employees349
Trading volume (10 day avg.)0m
Turnover£140m
Profit before tax£74m
Earnings per share72.61p
Cashflow per share73.76p
Cash per share6.76p

*Correct as at 30 Jul 2014

Rightmove boosts customer spend to deliver solid results

Property search engine Rightmove (RMV) has succeeded in driving customer spending, leading to an ‘upbeat’ outlook for the rest of the year.

Liberum analyst Ian Whittaker reiterated a ‘buy’ rating and target price of £25.10 following first-half results for the company. Shares fell 1.4% to £22.34 yesterday.

‘Rightmove has reported a solid set of H1 2014 results ahead of expectations,’ he said. ‘Annual revenue per account growth is robust at +£78 per month which has been supported by the effectiveness of the company’s strategy around driving additional customer spend.

‘The outlook is upbeat with full year expectations confirmed.’

Shareholders can expect an interim dividend of 13p to be paid in November.

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Key stats
Market capitalisation£1,829m
No. of shares out458m
No. of shares floating412m
No. of common shareholdersnot stated
No. of employees455
Trading volume (10 day avg.)1m
Turnover£389m
Profit before tax£89m
Earnings per share20.05p
Cashflow per share29.23p
Cash per share49.55p

*Correct as at 30 Jul 2014

Jupiter disappoints as it takes smaller slice of the pie

Lower management fee margins have led to a disappointing set of first-half results for Jupiter Asset Management (JUP).

Barclays analyst Daniel Garrod retained an ‘equal weight’ recommendation and target price of 400p after the company reported profit before tax 7% below projections and earnings per share of 12.9p, representing only a 4% year-on-year rise. Shares fell 3.8% to 399.4p yesterday on the news.

‘The cause of the miss appears to be weaker than expected revenues with management fee margins declining to 0.87%,’ he said.

‘Q2 flows are also slightly weaker than expected and assets under management of £33.1 billion miss our forecast by 1%. Outlook appears reasonably upbeat, emphasising long-term growth of savings markets and expansion plans for Jupiter’s distribution.’

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