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Why St James's Place is this analyst's top fourth quarter pick
by Danielle Levy on Oct 01, 2013 at 11:07
Broker Panmure Gordon has selected St James's Place as its top pick for the fourth quarter, arguing the restricted advice firm can continue its upward trajectory.
Panmure analyst Barrie Corns says the fall in share price following Lloyds' second share placing offers investors an attractive entry point. Although the shares have recovered 7.42% since the announcement in late May, Panmure says they have further to go.
'We believe that the fundamentals of the business remain strong, which was reaffirmed by the first half results in July,' Corns explained.
'The anticipated recovery in equity markets in the fourth quarter should see sales increase, which in turn should drive profitability, embedded value and the share price.'
At 615p Panmure says St James's Place is a buy and has placed a target price of 741p on the stock.
With sales at £427 million and a 21% rise in its annual premium equivalent, Panmure has upped its full year dividend forecast, following a much better than anticipated interim dividend of 6.38p, representing a 50% increase.
'In our view the Lloyds placing combined with a positive outlook for investment markets has created an excellent buying opportunity. The shares are trading just above our 2014F Embedded Value NAV of 593p per share which irrationally ascribes no value whatsoever to the brand or the distribution – the partnership,' Corns said.
The stock has historically had some well known backers among the fund management industry, such as Julian Chillingworth, who has held the stock for around three years in his Rathbone Recovery fund alongside Threadneedle UK manager Simon Brazier.
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by Danielle Levy on Dec 04, 2013 at 11:37