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The Expert View: Tate & Lyle, TUI Travel and Photo-Me
by Harry Brooks on Dec 10, 2012 at 09:46
A roundup of some of the best analyst commentary on shares including house builder Berkeley and cruise ship operator Carnival.
Our daily round-up of analyst recommendations and commentary, featuring Tate & Lyle, TUI Travel, Photo-Me, Berkeley Group and Carnival.
Shore Capital says 'hold' Tate & Lyle
Darren Shirley, analyst at Shore Capital, has reiterated his 'hold' recommendation on Tate & Lyle (TATE.L) having attended the first day of its investor seminar in the US.
The seminar was held at the company's Commercial and Food Innovation (CFI) centre, which was opened in the second quarter of this year at a cost of $32 million.
'Shore Capital was impressed by the CFI centre, which clearly demonstrates, in our view, the commitment Tate is making to its speciality food ingredients ambitions, a commitment we feel certain customers will also clearly identify when visiting the facility. In this respect, we note customer visits are said to be up +500%,' the analyst said.
'The facility has clearly enhanced Tate's capability to add value to its customers new product development (NPD) capability, whilst we believe the alignment of the R&D and commercial functions, has added rigour to the stage gate process driving the group’s own innovation pipeline.'
However, Shirley said progress would take time, so he's sticking at 'hold' for now.
|No. of shares out||1,118m|
|No. of shares floating||643m|
|No. of common shareholders||not stated|
|No. of employees||53247|
|Trading volume (10 day avg.)||3m|
|Profit before tax||£138m|
|Earnings per share||12.34p|
|Cashflow per share||31.84p|
|Cash per share||75.94p|
*Correct as at 7 Dec 2012
Deutsche Bank downgrades TUI Travel as share surge
Geof Collyer, analyst at Deutsche Bank, has downgraded TUI Travel (TT.L) from 'buy' to 'hold', saying the recent surge in the shares limits the upside for investors.
He said the company's new strategic roadmap suggests that it expects to deliver compound annual earnings growth of 7-10% over the coming five years, compared with flat growth over the previous four years.
'If successful, this could add 38% to 63% to group profits by end 2017. We have adjusted our forecasts to reflect the base case of this plan and raised our target price from 240p to 265p,' he said.
'However, given the significant rerating over the past five months, we have downgraded our recommendation from Buy to Hold.'
Shares in the group closed at 286.36p on Friday, up 0.66p or 0.23%.
FinnCap lifts target price for Photo-Me International
Mark Paddon, analyst at FinnCap, has increased his target price for photobooth operator Photo-Me International (PHTM.L) following a surge in profits.
Pre-tax profits of £19.5 million were up 15% year-on-year, 7% ahead of the forecast.
'Once again, strong underlying cash generation was evident, with the group’s net cash position increasing from £51.8 million at the last year-end to £70 million. This represents 19p per share and 33% of the group’smarket capitalisation,' Paddon said.
'We have increased our 2013 forecast PBT by 9% to £24.0 million from £22.0 million and introduced a 2014 forecast pre-tax profit of £27.0 million. We have also increased our 2013 dividend per share forecast to 3.0p from 2.8p.'
Shares in the group closed at 56p on Friday, down 1.5p or 2.61%.
Peel Hunt puts Berkeley's target price under review as profits surge
Robin Hardy, analyst at Peel Hunt, has put his target price for homebuilder Berkeley Group Holdings (BKG.L) under review following a very strong first-half profit figure.
'At £142 million the interim pre-tax profit is well ahead of our expected £119 million but one must be mindful of potential distortions,' he said.
'There are higher land sale and bigger commercial disposals but the bigger issue is likely to be timing. Berkeley has been very vocal about the impact of the new tax regime on the foreign investor market in London and there may be some earlier than previously scheduled sales in the current financial year.'
Although the target price is under review Hardy retains his 'buy' recommendation, saying scope for more hefty rises in profits and dividends supports the optimism.
Shares in the group closed at £17.21 on Friday, up 71.5p or 4.3%.
Investec backs Carnival on lower fuel price
James Hollins, analyst at Investec, has reiterated his 'buy' recommendation on cruise operator Carnival (CCL.L) following a drop in both the shares and the all-important price of bunker fuel.
'On the advent of bunker fuel (Houston IFO380) dropping below $600/metric tonne we take the opportunity to reiterate our BUY advice on Carnival,' he said.
'The shares have fallen 4% from their 12-month high at the end of November (having gone ex the $0.50/share special dividend) and we view the outlook for FY13E in a favourable light given our net yield, fuel, margin and free cash flow outlook.'
Carnival is Investec's key pick in the travel and leisure sector.
Shares in the group closed at £24.56 on Friday, up 26.07p or 1.07%.