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The Expert View: Petropavlovsk, Associated British Foods and Informa
by Harry Brooks on Feb 19, 2013 at 05:01
A roundup of some of the best analyst commentary on shares, also including Monitise.
Our daily round-up of analyst recommendations and commentary, featuring Petropavlovsk, Associated British Foods, Informa and Monitise.
Gold hedge reduces forecasts for Petropavlovsk
A slight fall in the price of gold of late has led Westhouse analyst Nick Hatch to trim his target price for miner Petropavlovsk (POG.L).
The company has hedged 399,000 ounces of gold over the 14 months ending in March 2014 at an average price of $1,663 an ounce. This guarantees a minimum revenue stream of about $664 million, Hatch said.
'The move will result in a lower average gold price than we are currently modelling ($1,750 an ounce for 2013) and thus results in a modest decline in our earnings forecast and target price (to 480p from 490p),' he said.
Nonetheless, with upside of about 50% still in place compared with his new target price, Hatch retains his 'buy' recommendation.
Shares in the group closed at 326.9p on Monday, up 0.5p or 0.2%.
Euro strength boosts Associated British Foods
The euro currency's recent strengthening against the US dollar is good news for Associated British Foods (ABF.L), and UBS analyst Alan Erskine has bumped up his target price as a result.
Since the start of the year the euro has gained 6% and the US dollar 4% against sterling, Erskine noted.
'We estimate just over 20% of AB Foods’ profits are denominated in euros (NB The EUsugar industry prices in euros) and 10% in dollars. On that basis we are increasing our FY13E adj earnings per share forecast by 2% to 97.8p,' he said. His target price for the company, which owns discount clothes retailer Primark, rises from £17.05 to £20.
'Whilst we anticipate lower Sugar profits in FY13 (higher sugar beet costs in the EU offsetting a 30%+ rebound in South African sugar production), we believe Primark’s accelerating momentum and lower restructuring costs in Grocery and Ingredients should allow for another year of double digit earnings growth,' he added.
Shares in the group closed at £18.16 on Monday, down 2.9p or 0.2%.
Investec pencils in a good quarter for Informa
Investec analyst Steve Liechti has increased his target price for publishing group Informa (INF.L), anticipating a rise in sales in the latest quarter.
Ahead of Thursday's full-year figures Liechti has increased his target price from 410p to 495p, expecting sales in the fourth quarter to be up 2% year-on-year. This follows a weak first three quarters of the year for Informa, which saw sales slip 2% over the period.
'Margin should be fine/good but we await evidence that poor FY12E like-for-like sales momentum can pick up into FY13E - consensus increasingly expects this and shares have moved accordingly,' the analyst said.
Shares in the group closed at 491p on Monday, down 1.5p or 0.3%.
'Buy' Monitise, Cantor Fitzgerald says
Mobile banking group Monitise (MONI.L) still looks to be immune to the gloomy economic outlook, according to Cantor Fitzgerald analyst Brendan D'Souza, who has reiterated his 'buy' recommendation on the group.
Interim results showed revenues up 63% year-on-year to £27.9 million, although this was 5% below D'Souza's estimate. Profits up 84% to £20 million were 2% ahead of the analyst's expectations.
Monitise provides mobile banking, payments and commerce networks around the world, and D'Souza said demand for its products remains strong. 'We are encouraged by the continued robust demand for Monitise’s mobile money solutions, which continue to be immune to uncertain macro economic conditions,' he said.
Shares in the group closed at 36.5p on Monday, up 1p or 2.8%.