Citywire printed articles sponsored by:
View the rest of this gallery online at http://citywire.co.uk/wealth-manager/gallery/a697305
The Expert View: Ryanair, Standard Chartered and RBS
A roundup of some of the best analyst commentary on shares, also including Resolution and Unilever.
Our daily round-up of analyst recommendations and commentary, featuring Ryanair, Standard Chartered, RBS, Resolution and Unilever.
If you'd like to receive news alerts on any of the stocks mentioned in The Expert View, click on the star icons below to add them to your favourites. To buy shares via JP Morgan, click on the shopping trolley icon.
'Buy' Ryanair on share weakness, Cantor Fitzgerald urges
The recent sell-off in Ryanair (RYA.L) shares amid fears about possible safety issues has presented investors with a buying window, according to Cantor Fitzgerald.
The shares have dipped over the past week after the Financial Times reported that 89% of 1,000 Ryanair pilots polled said the company did not have an 'open and transparent safety culture'. An overwhelming 94% said they wanted regulators to conduct an inquiry into its internal reporting system.
However, Cantor Fitzgerald analyst Robin Byde said the allegations have an ulterior motive: 'The real issue here is that RYA employs most of its pilots though agencies and on zero-hour contracts,' he said. 'These pilots want better terms and are using this kind of survey and other tactics to put pressure on management.'
Ryanair said the Ryanair Pilot Group that conducted the poll 'lacks any independence, objectivity or reliability', and that the survey is just the latest attempt to gain union recognition.
'On the wider investment case, RYA is good value trading on 2014 price to earnings of 14x vs. an historic average of 16x and is our preferred lowcost carrier. We view the sell-off yesterday as a good opportunity to pick upstock,' Byde added.
Shares in the group closed at 6.95p on Tuesday, up 0.1p or 1.2%.
Standard Chartered 'seriously mispriced', Investec argues
Standard Chartered (STAN.L) is 'seriously mispriced', with last week's first-half update highlighting the extent to which the bank's shares are under-valued, according to Investec's Ian Gordon.
Results for the first half of the year came in 5% ahead of consensus expectations, with the wholesale banking arm's 8% rise between the first and second quarter suggesting strong momentum.
'Every other UK bank missed H1 consensus and suffered declining quarter-on-quarter revenues and earnings,' Gordon said. 'We regard the basis upon which STAN’s Spring de-rating was justified - a ''generic'' argument around EM risk - as utterly spurious.'
Standard Chartered shares have rallied 16% since 24 June, but the analyst said they're still too cheap at 9.5x 2014 estimated earnings per share, making it cheaper than every other UK bank except Barclays and in line with HSBC.
'Absent a more company-specific reason as to why the STAN story is set to unravel, we can only conclude that the stock remains seriously mispriced. It’s our top pick - BUY,' Gordon concluded.
Shares in the group closed at £16.12 on Tuesday, down 0.5p or 0.03%.
‘Buy’ RBS, say Goldman Sachs
‘Multiple options’ are available to wring out value from shares in Royal Bank of Scotland (RBS.L), Goldman Sachs analysts say, after reviewing the options for splitting the bank in two.
The Goldman team’s analysis of the fall-out from dividing 81% taxpayer-owned RBS into good and bad banks comes amid a Treasury review of whether to hive off the bank’s troubled assets.
The analysts present two options: 1) combining Citizens and RBS Securities Inc. prior to their divestment; and 2) retaining the bad bank assets on the RBS balance sheet rather than transferring them into an off-balance sheet bad bank vehicle.
While admitting the outcome of the government’s review is subject to ‘considerable uncertainty’, the Goldman analysts conclude: ‘Multiple options exist to boost the value of RBS shares. This increases the potential that the HM Treasury exercise results in strategic changes at the group, in our view’.
Taking into account these potential changes they have raised their target price to 400p from 370p and reiterated their ‘buy’ rating.
Shares in the group closed at 333.2p on Tuesday, up 3.7p or 1.1%.
Resolution lacks momentum, The Share Centre warns
Resolution (RSL.L) remains a 'hold', according to The Share Centre, even after the insurance consolidation group reported a 17% rise in pre-tax profits in the first half of the year, beating analyst expectations.
The change in strategy at the group looks like it may be paying off, investment research manager Sheridan Admans said, but this isn't the first time the business has raised hopes of a turnaround.
'We continue to recommend Resolution as a hold as we hope over time its revised strategy will lead to a dynamic business, with a progressive dividend policy,' he said. 'However, strategies at the firm have come and gone in recent years and while we find today’s news encouraging we would like to see some momentum in the strategy.'
On the wider sector Admans struck a positive tone, saying interest rate fluctuations in certain countries should play into the insurers' hands in the coming months.
Shares in the group closed at 329p on Tuesday, up 5.3p or 1.6%.
Shore Capital welcomes Unilever dressings disposal
Shore Capital has reiterated its 'buy' recommendation on Unilever (ULVR.L) on news the consumer goods giant has struck a deal to sell a pair of dressings businesses.
US packaged food firm Pinnacle Foods, which owns brands such as Birds Eye and Hungry Man, will pay $580 million for Unilever's Wish-bone and Western dressings brands. The brands have an annual turnover of $190 million.
Shore Capital's Darren Shirley said the sale was a good move. 'We expect the initial impact on profit and loss will be neutral, whilst strategically it further reduces Unilever’s exposure to the lower growth food category, the lower growth North American market and raises the participation of the group’s four food power brands in the food portfolio – all good news in our view,' he said.
'After another sensible deal, and interim results which demonstrated in our view the margin potential of the group we reiterate our BUY stance.'
Shares in the group closed at £26.17 on Tuesday, up 29p or 1.1%.