The Expert View: Taylor Wimpey, Pace and Rightmove
Our daily roundup of the best analyst commentary on shares, also including Jupiter and Greggs.
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.’
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’.
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’.
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.
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.’