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The Expert View: Topps Tiles, Britvic and Enterprise Inns

Our daily round-up of analyst recommendations and commentary, also featuring Merlin Entertainments and Brewin Dolphin.

Our daily round-up of analyst recommendations and commentary, featuring Merlin Entertainments, Topps Tiles, Britvic, Enterprise Inns and Brewin Dolphin.

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Key stats
Market capitalisation£3,749m
No. of shares out1,014m
No. of shares floating670m
No. of common shareholdersnot stated
No. of employeesnot stated
Trading volume (10 day avg.)0m
Profit before tax£76m
Earnings per share7.48p
Cashflow per share21.37p
Cash per share13.90p

*Correct as at 29 Jan 2014

Jefferies' first assessment of Merlin positive

Jefferies has given a ‘buy’ recommendation for Merlin Entertainments (MERL.L) in its first assessment of the shares.

The owner of Legoland and Madame Tussauds floated in November and analyst Mark Irvine-Fortescue has put a target price of 425p on the shares.

Irvine-Fortescue said the company ‘had built up a unique stable of strong leisure brands and assets with leading market positions’ and is well placed to benefit from ‘growth in leisure spending; expansion of the middle classes in emerging markets; increase in international tourism; and growth of the short break market’.

The analyst expects Merlin to provide double-digit earnings growth thanks to ‘multiple growth levers’ such as expansion of the Legoland parks and international expansion where ‘management has a good track record’.

Shares crept up on Wednesday morning, 0.95% or 3.5p higher to 371p.

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Key stats
Market capitalisation£276m
No. of shares out192m
No. of shares floating166m
No. of common shareholdersnot stated
No. of employees1720
Trading volume (10 day avg.)0m
Profit before tax£9m
Earnings per share4.73p
Cashflow per share6.93p
Cash per share9.60p

*Correct as at 29 Jan 2014

Cantor upgrades Topps Tiles after ‘boutique’ roll out

Cantor has upgraded Topps Tiles (TPT.L) from ‘sell’ to ‘hold’ following the roll-out of the retailer’s new ‘boutique store’.

Analyst Freddie George upgraded the shares and the target price from 100p to 135p after visiting the new Clapham store. The boutique stores will be rolled-out in affluent areas and aim to take advantage of the upturn in the housing market.

‘Our initial thoughts on the new format were positive,’ he said. ‘We can see the potential for a roll out of this format in affluent conurbations while housing statistics are strong, but we are less sure of the store financials when the housing market goes into reverse.’

At the time of writing shares were up 0.3%, or 0.44p, at 143p.

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Key stats
Market capitalisation£1,764m
No. of shares out246m
No. of shares floating227m
No. of common shareholdersnot stated
No. of employees3276
Trading volume (10 day avg.)0m
Profit before tax£62m
Earnings per share25.30p
Cashflow per share43.16p
Cash per share43.62p

*Correct as at 29 Jan 2014

Britvic navigates a challenging market

Drinks maker Britvic (BVIC.L) has weathered a turbulent time in the market to deliver revenue of £311.8 million.

Shore Capital analyst Phil Carroll retained a ‘buy’ rating and a target price of 701p on the shares after the company’s Q1 trading statement.

‘Despite an ongoing challenging environment across all its core markets, Britvic has delivered a solid update with the group revenue of £311.8 million in line with our estimate of £311.9 million,’ said Carroll.

He added the results were a ‘solid performance from Britvic against challenging markets with profit guidance retained and a cost savings programme that remains on track’.

At the time of writing the shares were up 1.64%, or 11.5p, at 712p.

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Key stats
Market capitalisation£791m
No. of shares out506m
No. of shares floating488m
No. of common shareholdersnot stated
No. of employees508
Trading volume (10 day avg.)1m
Profit before tax£-4m
Earnings per share-0.80p
Cashflow per share2.20p
Cash per share28.46p

*Correct as at 29 Jan 2014

Tougher pub regulation sees Numis downgrade Enterprise Inns

Pub franchise Enterprise Inns (ETI.L) has been downgraded from ‘add’ to 'hold' by Numis as it predicts a tough year for the company.

Analyst Douglas Jack said the company is trying to ‘climb a wall of worry’ and set a target price of 170p on the shares.

Ahead of Enterprise’s Q1 results, Jack predicted income would be ‘flat over the year’ as the government clamps down on self-regulation within the pub industry.

‘The business secretary said last week that statutory regulation is necessary and that MPs would soon hear the government’s plans,’ he said.

There are concerns that the government will bring in ‘free-of-tie’ regulation which allows publicans who rent pubs from companies like Enterprise to buy products on the open market and are not beholden to purchasing certain brands through their landlord.

At the time of writing shares were up 0.38%, or 0.6p, at 158p.

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Key stats
Market capitalisation£819m
No. of shares out274m
No. of shares floating247m
No. of common shareholdersnot stated
No. of employees1960
Trading volume (10 day avg.)0m
Profit before tax£21m
Earnings per share8.00p
Cashflow per share15.93p
Cash per share50.53p

*Correct as at 29 Jan 2014

Brewin Dolphin target price increased but still a ‘hold’

Peel Hunt has upgraded its target price for wealth manager Brewin Dolphin (BRW.L) as Q1 results provide positive news.

Analyst Stuart Duncan retained a ‘hold’ recommendation on the shares as results showed assets under management growing by 3% and income up 7%.

While net inflows were a ‘modest’ £0.1 billion, the figure ‘masks the strong inflows into discretionary managed funds (£0.3 billion), as the review of the advisory business continues to see outflows (£0.4 billion)’.

‘The business continues to transition towards higher quality, discretionary earnings,’ said Duncan. ‘However, with the current rating a slight premium to the sector, we think the share price looks largely up with events.’

At the time of writing shares were down 0.26%, or 0.8p, at 301p.

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