The Expert View: EasyJet, GKN and GlaxoSmithKline

Our daily round-up of analyst recommendations and commentary, featuring EasyJet, GKN, GlaxoSmithKline, Henderson Group and Portmeirion.

Key stats
Market capitalisation	£3,384m
No. of shares out	396m
No. of shares floating	223m
No. of common shareholders	not stated
No. of employees	8446
Trading volume (10 day avg.)	2m
Turnover	£3,854m
Profit before tax	£255m
Earnings per share	67.36p
Cashflow per share	95.09p
Cash per share	222.98p

*Correct as at 21 Jan 2013

Investec downgrades EasyJet to 'hold'

Having been his key airlines pick last year, Investec analyst James Hollins says EasyJet (EZJ.L) shares have got ahead of themselves, and he's downgraded the group from 'buy' to 'hold'.

The shares have doubled in value over the past year, and although this was merited investors shouldn't get greedy, Hollins said.

'The stock was our key 2012 airlines pick, but the shares have outpaced the market and we now project a period of share price stability rather than material growth, coupled with uncertainty over the outcome of a major new aircraft order in 2013,' he said.

The possibility of bad weather stoppages and strike action - both notably absent last year - could also hit earnings this year, he added.

Shares in the company closed at 853p on Monday, down 18.3p or 2.1%.

Key stats
Market capitalisation	£4,022m
No. of shares out	1,630m
No. of shares floating	1,624m
No. of common shareholders	not stated
No. of employees	50000
Trading volume (10 day avg.)	5m
Turnover	£5,746m
Profit before tax	£279m
Earnings per share	17.89p
Cashflow per share	33.92p
Cash per share	10.04p

*Correct as at 21 Jan 2013

Charles Stanley upgrades GKN on US car sales growth

Charles Stanley analyst Jeremy Batstone-Carr has upgraded engineering business GKN (GKN.L) from 'hold' to 'accumulate' based on US strong car sales and what he called an 'undemanding' valuation.

US automotive sales are forecast to grow 4.9% in 2013, Batstone-Carr noted, compared with a 1.7% decline in Europe. Although GKN has twice the exposure to Europe as the US, this should work out as a net positive, the analyst said.

'On balance of the facts, cautiously upbeat comments from GKN’s key customers, an undemanding price to earnings multiple and an expected improvement in trading profit margin we move our recommendation from Hold to Accumulate on weakness.'

Under Charles Stanley's methodology 'accumulate' means investors can expect an absolute total return of 5-15% over a year, compared with -5% to 5% under the 'hold' recommendation.

Shares in the company closed at 247p on Monday, up 3.8p or 1.6%.

Key stats
Market capitalisation	£69,055m
No. of shares out	4,928m
No. of shares floating	4,893m
No. of common shareholders	not stated
No. of employees	97389
Trading volume (10 day avg.)	6m
Turnover	£27,387m
Profit before tax	£5,261m
Earnings per share	103.18p
Cashflow per share	134.95p
Cash per share	116.81p

*Correct as at 21 Jan 2013

Berenberg Bank sticks with GlaxoSmithKline despite gloomy 2012 projections

Drugsmaker GlaxoSmithKline (GSK.L) remains a 'buy', Berenberg Bank analyst Alistair Campbell says, despite taking a battering last year.

The company releases its full-year results on Wednesday 6 February, and Campbell is projecting a decline in earnings of around 3%. 'The company needs new products to resurrect growth, but pipeline contribution in 2013 will be thin,' he cautioned. 'The major opportunities from the pipeline should accelerate sales in 2014 and beyond, but will not help much this year.'

Nonetheless, he's still backing the shares on their long-term potential, with clinical data for cancer drug Mage-A3 and heart-attack treatment darapladib representing two 'wild card' opportunities ahead of an expected upturn in 2014.

Shares in the company closed at £14 on Monday, up 24p or 1.7%.

Key stats
Market capitalisation	£1,735m
No. of shares out	1,112m
No. of shares floating	1,096m
No. of common shareholders	not stated
No. of employees	1060
Trading volume (10 day avg.)	2m
Turnover	£686m
Profit before tax	£34m
Earnings per share	3.36p
Cashflow per share	7.79p
Cash per share	24.95p

*Correct as at 21 Jan 2013

Shore Capital upgrades Henderson after PFI fund claim dropped

Investment management company Henderson Group (HGG.L)'s settlement of a claim against one of its private finance initiative (PFI) funds has spurred Shore Capital analyst Owen Jones to upgrade the shares from 'hold' to 'buy'.

Henderson announced on Friday that the claim against the fund is to be withdrawn, with it paying legal costs for the claimants, but without any admission of liability.

Jones believes investors are now presented with an attractive entry window: 'We upgrade our recommendation this morning noting the attractive positioning of the group’s funds and asset bed – mainly UK and Europe – but also on valuation grounds.

'In terms of metrics, Henderson trades on 12.7x to financial year 2012 going to 13.7x next year. These metrics compare to a sector average of 15.1x and 14.4x for the same periods.'

Shares in the company closed at 158.7p on Monday, up 7.5p or 5%.

Key stats
Market capitalisation	£56m
No. of shares out	10m
No. of shares floating	5m
No. of common shareholders	not stated
No. of employees	579
Trading volume (10 day avg.)	0m
Turnover	£54m
Profit before tax	£4m
Earnings per share	43.13p
Cashflow per share	54.03p
Cash per share	66.25p

*Correct as at 21 Jan 2013

Impressive dividend history makes Portmeirion a 'buy', Seymour Pierce says

Crockery maker Portmeirion (PMP.L)'s impressive dividend history makes it a 'buy', according to Seymour Pierce analyst Freddie George.

The company's latest results indicate that full-year profits will be in line with market expectations despite 'Superstorm Sandy' blowing US sales off course. Overall, the company expects sales to be about 3% above last year’s revenues at over £55 million and in line with George's forecasts.

'The stock, which continues to trade at a discount to peers, is valued at 11.9x FY12E earnings with a prospective dividend yield of almost 4%, more than 2x covered,' George said. 'The company has never cut its dividend in its 20 year-plus history of being a quoted company and over the last five years has grown the dividend by an average of 7% per annum.'

Seymour Pierce is a market maker for Portmeirion.

Shares in the company closed at 550p on Monday, up 2.5p or 0.5%.