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The Expert View: EnQuest, Anglo American and Spectris
A round-up of analyst notes, including their take on African Barrick Gold and Yell Group.
by Harry Brooks on Feb 20, 2012 at 05:01
We’ve rounded up some of the best comment from top analysts to give you their views on EnQuest, Anglo American, Spectris, African Barrick Gold and Yell Group.
Liberum Capital tips EnQuest on impressive growth outlook
Andrew Whittock, analyst at Liberum Capital, has upgraded North Sea-focused oil explorer EnQuest (ENQ.L) to 'buy' from 'hold' as he believes the company is poised to expand its presence in the UK Continental Shelf.
Shares in EnQuest jumped after the group began buying up stakes in the Kraken oil discovery, Whittock said, and he believes more acquisitions look likely as EnQuest has the technical and financial capacity needed to secure more deals. However, the analyst said, the current share price 'barely reflects asset value and not growth'.
'We anticipate continued delivery will encourage some recognition of growth potential and have moved to valuing the shares off a target cash flow multiple,' he added. Whittock now has a price target for the firm of 144p.
Shares in EnQuest closed at 118.6p on Friday, up 1.6p.
Jeffries disappointed by Anglo American's meagre second-half dividend
Christopher LaFemina, analyst at Jeffries, has retained his 'buy' recommendation on mining giant Anglo American (AAL.L) following results that were in line with expectations, but he has flagged up the disappointing dividend as a concern.
Anglo reported second-half earnings before interest and taxes of $5.1 billion, which was in line with consensus expectations, and underlying earnings of $2.48 a share, well above the consensus estimate of $2.20.
Given the strong results, LaFemina was disappointed that the second-half dividend rose just 15% year-on-year to $0.46 a share. 'Anglo has the strongest balance sheet and highest free cash flow yield of the majors, yet had the weakest dividend increase and lowest payout ratio,' he said.
'While Anglo shares should be good value, we are somewhat concerned about the company's lack of capital returns,' LaFemina cautioned.
Shares in Anglo American closed at £26.74 on Friday, up 30p.
Peel Hunt downgrades Spectris as share price soars
Dominic Convey, analyst at Peel Hunt, has downgraded precision instruments maker Spectris (SXS.L) to 'hold' from 'buy' as the shares have almost hit his target price.
The company, which was founded in 1915 and at one time built bombers for the RAF, recently released its full-year results, which showed that sales rose 23% year-on-year while adjusted profits before tax leapt 45% to £191.6 million.
Convey said the 'strong results confirm the progress on margin and the continuing push into emerging markets', and he added that the strong management team and conservative guidance compensate for limited visability on the year ahead.
Nonetheless, with the shares only just shy of his price target of £17.00, Convey has opted to scale back his recommendation.
Shares in Spectris closed at £17.05 on Friday, up 45p.
Numis downgrades African Barrick Gold on weaker 2012 outlook
Cailey Barker, analyst at Numis, has downgraded mining group African Barrick Gold (ABGL.L) to 'add' from 'buy' after full-year results failed to meet her expectations.
Earnings per share (EPS) came in at $0.67, missing Barker's forecast of $0.71 and the analyst consensus of $0.69. The company's outlook for this year isn't encouraging either, with production expected to be flat while costs are predicted to rise as a result of power issues.
Barker has subsequently revised down her 2012 EPS forecast to $0.68 from $0.77 previously.
Dividends from the firm, meanwhile, rose to a total of 16.1 cents, double last year's figure and ahead of Barker's forecast. The dividend policy has been lifted to 15-30% of net profits, which the analyst said was 'perhaps an admission that the acquisition strategy has been unable to cement anything tangible'.
Shares in African Barrick Gold closed at 443p on Friday, down 4.9p.
Credit Suisse predicts more revenue declines at Yell Group
Simon Baker, analyst at Credit Suisse, has downgraded his revenue forecasts for Reading-headquartered directories business Yell Group (YELL.L) following news that revenues missed expectations in the latest quarter.
In the four months to 31 December group revenues hit £382.8 million, down 15.1% on a year-on-year basis and 5.5% below consensus expectations. Earnings before interest, taxes, depreciation and amortisation (EBITDA), meanwhile, beat consensus expectations by 3.4%, coming in at £108.6 million, down £12.7 million on the previous year.
Baker said this has become a familiar pattern: 'This reflected the same underlying trends: continued deterioration in its core directory businesses offset by good cost management short term to make EBITDA expectation, but it is the topline trajectory that prompts us to trim our revenue assumptions.'
The analyst has trimmed his full-year revenue forecast for 2012 by 2.7% to £1.63 billion, and his 2013 forecast by 5.6% to £1.48 billion.
Shares in Yell Group closed at 4.5p on Friday, down 0.2p.
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Look up the shares
- Yell Group PLC (YELL.L)
- African Barrick Gold PLC (ABGL.L)
- Spectris PLC (SXS.L)
- EnQuest PLC (ENQ.L)
- Anglo American PLC (AAL.L)