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The Expert View: Supergroup, Hunting and G4S
Our daily round-up of analyst recommendations and commentary, featuring Dixons and Experian.
by Harry Brooks on May 11, 2012 at 05:01
We’ve rounded up some of the best comment from analysts to give you their views on Supergroup, Hunting, G4S, Dixons and Experian.
Canaccord upgrades Supergroup after 'annus horribilis'
Wayne Brown, analyst at Canaccord, has upgraded clothes retailer Supergroup (SPG.L) from 'hold' to 'buy' as he believes the shares are now battered enough to make them an appealing target.
The group, which owns the ubiquitous Superdry brand, has had what Brown called an annus horribilis, with three profit warnings and shares in the company losing 75% relative to general retailers.
The company's fourth-quarter trading statement contained few surprises, the analyst said. Group sales slowed to 14.1% growth in the quarter from 25.3% in the third quarter, 42% in the second quarter and 66% in the first quarter. Supergroup is sticking with its previous pre-tax profit guidance of £43 million for the year.
'Whilst we do not expect near term trading to improve,' Brown said, 'the shares are discounting further bad news. On a number of metrics there is medium term value, hence our upgrade to buy.' The analyst added that the management owns 63% of the company's shares, and at their current level a management buy-out is a possibility.
Shares in the group closed at 316.22p on Thursday, up 9.22p or 3%.
Liberum Capital upgrades Hunting as shares head south
Andrew Whittock, analyst at Liberum Capital, has upgraded energy services provider Hunting (HTG.L) from 'sell' to 'hold' following a marked decline in the company's share price over the past week.
Whittock said the decline was a result of investors waking up to a number of factors that will weigh on the company in the year ahead. These include US onshore activity declining, horizontal drilling operations declining in the country, and rival Weir Group's results indicating that demand for hydraulic fracturing equipment is falling.
'The current share price is now back at more reasonable levels given Hunting’s exposure to uncertain US markets and we have turned less negative, raising our recommendation from sell to hold,' the analyst said. Whittock retains his 770p target price on the shares.
Shares in the group closed at 804.92p on Thursday, up 4.92p or 0.62%.
Credit Suisse upgrades G4S ahead of Q1 results
Andrew Grobler, analyst at Credit Suisse, has upgraded security services firm G4S (GFS.L) from 'neutral' to 'outperform' as he believes the company is poised to deliver strong organic growth in the year ahead following a number of important contract wins.
The analyst expects organic growth to ramp up to 9% this year, up from 5% last year, on the back of contract wins in the UK and North America and improving growth from the company's cash solutions division. In the coming five years he expects earnings per share to rise at a compound annual growth rate of 10%.
'This will be led by the new markets operations, which we expect will grow from 34% of 2011 earnings before interest, tax and amortisation to 40% by 2016. We do not expect that GFS will make a large acquisition in the near term but it will continue to make bolt-on purchases that we believe will both boost EPS growth and create value,' the analyst said.
G4S will report its first-quarter results on Tuesday and will host a capital markets day on 22 May, both of which have the potential to move the shares, Grobler said.
Shares in the group closed at 266.13p on Thursday, up 3.33p or 1.27%.
Seymour Pierce lifts target price for Dixons
Freddie George, analyst at Seymour Pierce, has increased his target price for high-street electronics retailer Dixons (DXNS.L) following the publication of trading results that beat expectations.
In the 16 weeks to the end of April total group sales rose 4%, while like-for-like (LFL) sales climbed 5%. Over the year as a whole LFL sales slipped 3%.
'The trading update to end of April was better than expected particularly in the core markets of the UK and Scandinavia but there might be some disappointment that the better than projected sales has not led to a more significant upgrade,' George said.
'The stock has been an outstanding performer since the beginning of the year rising by over 60% in this time boosted by the strong LFLs reported at the beginning of the year,' he added, saying that the chain is now close to being the 'last man standing' in terms of high-street electronics retail in both the UK and Scandanavia.
Shares in the group closed at 18.23p on Thursday, up 0.73p or 4.17%.
Oriel says 'add' Experian
Hector Forsythe, analyst at Oriel Securities, has retained his 'add' recommendation on information services group Experian (EXPN.L) following preliminary results that came in slightly ahead of expectations.
In the year ended 31 March revenues in constant currency terms rose 15%, with organic revenue growth rising 10%. Total Group revenue hit $4.5 billion, up from $3.9 billion last year.
Looking ahead, the group expects 'mid-high single-digit organic revenue growth' and it expects margins to be maintained or improve.
On the group's outlook statement, Forsythe said: 'Our view is that guidance is cautious, as ever. The rating is demanding, but this is a group that takes investors beyond continental Europe. The US economy continues to gain momentum – reflected in reported numbers – and the business brings high quality exposure to socio/economic development in Brazil and Colombia.'
Shares in the group closed at 920.84p on Thursday, down 30.16p or 3.17%.
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Look up the shares
- Dixons Retail PLC (DXNS.L)
- Experian PLC (EXPN.L)
- Hunting PLC (HTG.L)
- Supergroup PLC (SGP.L)
- G4S PLC (GFS.L)