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What Woodford makes of the bank rally

by Emma Dunkley on Feb 18, 2013 at 10:34

‘We do not believe that a recovery in Europe is imminent – for Imperial Tobacco or anyone else – but at least Imperial Tobacco has a response which should protect shareholders.’

He said the company is bringing forward a cost-cutting programme in Europe, so that although first half profits will be slightly lower, full year results should not be affected.

‘Analysts still expect the company’s earnings to grow by 7% this year, the dividend by even more,’ he added.

AstraZeneca meanwhile has seen the appointment of its new chief executive Pascal Soriot, who said in the firm’s recent results performance was good last year, despite it be being a period of ‘significant patent expiry and tough market conditions globally.’

Woodford said: ‘We heard more about his grasp of the business and what he intends to do during the post-results conference call which left us with a sense of increasing confidence in the long-term outlook for the business.

‘Only three months in and he has already made some significant changes to the senior management team and has a clear view on what the business needs to do to return to growth.

‘We have long believed that AstraZeneca is a structurally and profoundly undervalued company but it has been unclear what the route to realising that value was. With a new management team and a renewed sense of purpose, commitment and decisiveness, the route to value realisation is becoming much clearer.’

Selling out of Vodafone

Last week, Woodford completely sold out of his holding in Vodafone, in both his High Income and Income funds.

He said this is because the company has reduced its forecasts for revenue growth on the back of on-going weakness in its core southern European markets, while the cash flow cover of the dividend has fallen to ‘uncomfortably low levels.’

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