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The Expert View: Taylor Wimpey, Rightmove and Anite
by Harry Brooks on Oct 01, 2013 at 05:01
A roundup of analysts' commentary on shares, also including Avon Rubber and Jubilee Platinum.
Our daily round-up of analyst recommendations and commentary, featuring Taylor Wimpey, Rightmove, Anite, Avon Rubber and Jubilee Platinum.
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Taylor Wimpey to gain from accelerated Help to Buy
David Cameron's decision to launch the second stage of the Help to Buy scheme next week rather than next year has spurred Liberum Capital to upgrade homebuilder Taylor Wimpey (TW.L) from 'hold' to 'buy'.
Under the plan the government will provide mortgage guarantees of up to 15% on properties worth up to £600,000 - renewing fears of house-price inflation leading to a bubble in the market.
'We upgrade Taylor Wimpey (from Hold to Buy) today (price target Unchanged at 113p) to reflect the improving environment,' analyst Charlie Campbell said.
'Taylor Wimpey has similar attractions to Barratt (good South East, lowish margins) but could also benefit from a re-rating as a capital return strategy is announced (capping volume growth and returning surplus capital), which we expect next year.'
Shares in the group closed at 100.4p on Monday, up 3.4p or 3.5%.
Rightmove all set for growth, Westhouse says
Another stock to watch amid the government's relentless efforts to hurry the property market along is online estate agent Rightmove (RMV.L), according to Westhouse, which has a 'buy' recommendation on the shares.
The analysts welcomed the decision to embark on phase two of the Help to Buy plan early: 'We expect this initiative to stimulate a market that appears to be already showing clear signs of recovery and to help RMV build on a strong H1 performance,' they said.
Over the past three months the shares have outpaced the market by 6%, they added, which they said was a modest rise given the encouraging first-half update.
'We do not think the group’s valuation multiples (30.5x / 23.0x 2013 price to earnings and enterprise value to earnings ratios respectively), although sizeable in absolute terms, adequately reflect this momentum, strong cash flows and substantially superior growth prospects,' they added, reiterating their £25.70 target price.
Shares in the group closed at £23.69 on Monday, up 22p or 0.9%.
Anite's undervalued, Canaccord argues
Shares in Anite (AIE.L) are undervalued, according to Canaccord, which has a 'buy' recommendation on the communications specialist.
'Anite shares remain firmly in unloved territory following material underperformance over the past few months. We believe that this is unjustified and see the current level as an excellent buying opportunity,' analyst Jonathan Imlah said.
Anite is a specialist in testing the hardware and software that runs the world's wireless communication networks, and Imlah said the roll-out of the 4G standard should mean more work for the firm.
'While there has been some high profile consolidation amongst handset vendors such as Nokia and Blackberry, new players that cater to local markets in Asia and that are relatively unknown in the West are springing up all the time,' Imlah said.
'Similarly, while Apple and Samsung dominate the smartphone market, handset models can have multiple versions or SKUs (the new Apple iPhone 5 reportedly has as many as 13), with different configurations, all of which must be tested.'
Shares in the group closed at 112.5p on Monday.
WH Ireland bumps up target price for Avon Rubber
WH Ireland has increased its target price for Avon Rubber (AVON.L) on the back of a pre-close update that came in ahead of expectations.
A strong fourth-quarter performance from the firm's protection and defence division means underlying operating profit is now anticipated to be ahead of current market expectations, while trading in the dairy arm is expected to meet expectations.
'We have raised our 2013 earnings expectations by 3.2% and given the outlook for the new financial year and beyond, increased our 2014 and 2015E earnings per share forecasts by 3.7% and 4.3% respectively,' analyst John Cummins said.
'Momentum is clearly increasing and whilst market conditions in Dairy have continued to be challenging, in our opinion it is only a matter of time before an improvement is seen. Following the update, we maintain our Buy recommendation and raise our share price target to 590p (530p).'
Shares in the group closed at 550p on Monday, up 16p or 3%.
Finncap waits for clarity on Jubilee Platinum
A decidedly mixed trading update from Jubilee Platinum (JLP.L) means Finncap is keeping its recommendation under review for now.
Friday's update showed an operating profit of £1.9 million, but after including central overheads and other costs of £9.1 million, at the bottom line the company lost some £7.4 million, or 2.4p per share.
'The deal to acquire Platinum Australia is still a principal corporate target,' analyst Martin Potts said. However, before this can happen Macquarie Bank has to sign off the plan. 'Amongst the remaining conditions precedent is a need for Jubilee to secure funding of around $19 million and to restart mining and processing,' the analyst added.
A planned sale of Jubilee's Quartzhill project in South Africa, meanwhile, is still awaiting formal approval two years after it was agreed.
'Our price target and forecasts remain under review pending clarity about the various deals in hand.'
Shares in the group closed at 5.3p on Monday, down 0.1p or 1.4%.