The Expert View: Greene King, Rentokil and ITV

Our daily round-up of analyst recommendations and commentary, featuring Greene King, Rentokil, ITV, Moss Bros and Randgold Resources.

Key stats
Market capitalisation	£1,434m
No. of shares out	218m
No. of shares floating	206m
No. of common shareholders	not stated
No. of employees	11065
Trading volume (10 day avg.)	0m
Turnover	£1,140m
Profit before tax	£102m
Earnings per share	47.50p
Cashflow per share	73.38p
Cash per share	17.00p

*Correct as at 14 Jan 2013

Raise a glass to Greene King's record sales, Shore Capital says

Record pre-Christmas sales suggest pubco Green King (GNK.L) will continue to grow this year, according to Shore Capital analyst Greg Johnson, who has reiterated his 'buy' recommendation on the shares.

Like-for-like sales in the six-week period over Xmas increased by 2.7%. Although this represents a slowdown on the 4.3% reported in the first half, it is an acceleration on the +2.2% in the previous six weeks. Sales on Christmas Day hit £2.7 million, up 6.8%, and during the whole of December the chain sold 448,000 Christmas meals.

'Today’s robust update underpins our full year estimate for pre-tax profit of £160 million (earnings per share: 56.3p), with our managed estimates in particular looking conservative,' Johnson said.

'Greene King trades on a calendar 2013F price to earnings ratio of just over 11x and with trading and growth opportunities remaining attractive (implying high-single digit annual earnings growth over the medium term) we continue to rate the stock a BUY.'

Shares in the group closed at 651p on Monday, up 2.6p or 0.4%.

Key stats
Market capitalisation	£1,650m
No. of shares out	1,809m
No. of shares floating	1,790m
No. of common shareholders	not stated
No. of employees	66470
Trading volume (10 day avg.)	3m
Turnover	£2,544m
Profit before tax	£-70m
Earnings per share	-3.84p
Cashflow per share	10.18p
Cash per share	4.27p

*Correct as at 14 Jan 2013

City Link could yet lift Rentokil higher, Investec says

A potential recovery in Rentokil Initial (RTO.L)'s beleaguered parcel business City Link means there's still upside in the shares, Investec analyst Gideon Adler has said.

Following a strong year for the shares 2013 is likely to see the company come under renewed scrutiny, Adler said. However, there's enough on the upside to justify a 'hold' recommendation, he said.

'Ultimately, we view trading risk as on the downside, but with the current valuation still screening cheaply, and potential short term sentiment upside from a City Link recovery (or resolution), we remain Holders for now,' he said.

Shares in the group closed at 91p on Monday, down 0.1p or 0.1%.

Key stats
Market capitalisation	£4,505m
No. of shares out	4,035m
No. of shares floating	3,603m
No. of common shareholders	not stated
No. of employees	3958
Trading volume (10 day avg.)	12m
Turnover	£2,140m
Profit before tax	£247m
Earnings per share	6.20p
Cashflow per share	8.10p
Cash per share	20.60p

*Correct as at 14 Jan 2013

ITV set to gain from Channel 4 dispute, Westhouse says

Channel 4's loss due to a dispute with WPP over advertising costs will be ITV (ITV.L)'s gain, Westhouse analyst Roddy Davidson has said, raising his target price to reflect the expected windfall.

'ITV’s share price has recently benefited from of a widely reported dispute between WPP’s GroupM subsidiary and Channel 4,' Davidson said. 'Specifically, Channel 4’s refusal to reduce advertising costs is reported to have resulted in c.£20m of spend being diverted away from the broadcaster during January with ITV identified as a major beneficiary.'

Although the dispute has now been resolved, the analyst expects the effects to be visible on ITV's first-quarter results. Sentiment has also improved after the pre-xmas acquisition of a controlling stake in Gurney, the US reality TV show producer.

'We have decided to increase our target price by 5% to 133p to reflect the positive momentum within the business and the increased probability of upgrades at the time of next month’s prelims thanks to Gurney, the Channel 4 effect and the possibility that our current expectation of 0.5% net advertising revenue growth during FY2013E could prove conservative,' he concluded.

Shares in the group closed at 111.1p on Monday, up 1.1p or 1%.

Key stats
Market capitalisation	£71m
No. of shares out	99m
No. of shares floating	69m
No. of common shareholders	not stated
No. of employees	976
Trading volume (10 day avg.)	0m
Turnover	£101m
Profit before tax	£2m
Earnings per share	1.53p
Cashflow per share	6.61p
Cash per share	24.68p

*Correct as at 14 Jan 2013

Seymour Pierce upgrades target price for Moss Bros

An unscheduled trading update from Moss Bros (MSB.L) suggests the turnaround of the gents' clothing specialist remains on track, Seymour Pierce analyst Freddie George says, but he retains a 'hold' recommendation as he believes the shares are fully valued.

Moss Bros now expects to exceed market expectations for the financial year following strong demand over the past 24 weeks. Like-for-like (LFL) sales for the 24 weeks to 12 January 2013 were up 2.7% on the same period last year, while LFL cash gross profit for the 24 weeks to 12 January 2013 was 9.5% ahead of last year.

'Following this update, we are provisionally raising our FY13 pre-tax profit forecast from £1.8m to £2.0m taking earnings per share up from 1.8p to 2.0p,' George said. His target price rises from 55p to 62p

'However, we believe the recovery is fully reflected in the rating at 33.2x FY13 forecast earnings declining to 22.1x in the following year.'

Shares in the group closed at 71.2p on Monday, up 4.8p or 7.2%.

Key stats
Market capitalisation	£5,415m
No. of shares out	92m
No. of shares floating	91m
No. of common shareholders	not stated
No. of employees	1621
Trading volume (10 day avg.)	0m
Turnover	699m USD
Profit before tax	238m USD
Earnings per share	2.58 USD
Cashflow per share	3.52 USD
Cash per share	3.35 USD

*Correct as at 14 Jan 2013

Canaccord eyes buying window in Randgold Resources

Military action in Mali could create a buying opportunity in Randgold Resources (RRS.L), according to Canaccord analyst Tim Dudley.

The French military has now entered Mali to help defend the capital, Bamako, and to halt the advance of the rebels from the north-east.

'While news that military action has commenced is likely to put pressure on the shareprice in the short term, the potential for military intervention has been known risk inMali for some time,' Dudley said. 'Now this has been realised, and if successful, it allows for the country to move forward in re-establishing security in the north east, followed by democratic elections.'

With the 'headline risk' now realised, the analyst expects a buying opportunity to emerge. His target price stands at £9.

Shares in the group closed at £5.88 on Monday, down 15.7p or 0.3%.