Date: Thursday 20 Jan 2011
Nomura says that engineer Invensys is on track after its interim management statement on Thursday, as revenue forecasts for the full year are in line with consensus.
Invensys Operations management saw strong growth in orders across all businesses and good conversion into sales, but the Japanese broker’s assumed second half margin improvement of 1.9 percentage points may now be slightly on the high side.
“Profitability in rail has been off to a good start into the second half with higher profits versus the same quarter last year. This makes our forecast for a moderate decline in profits in H2 [second half] conservative,” the broker says.
“Slower end demand, some destocking and rising raw materials prices (copper and resins) have led to a moderate decline in operating profits [for the Controls division] during the third quarter, which is in line with our expectations for the second half as a whole.”
Nomura says its price target of 360p is based on 4% long term growth, maintaining a ‘neutral’ rating on the stock.
Peel Hunt reckons fund manager Aberdeen Asset Management remains a key pick in the sector given the momentum behind its earnings.
The first quarter interim management statement revealed that assets under management grew by 2.6% to £183.3bn. The results indicate “another quarter of similar trends, inflows into equities being offset by outflows from fixed income,” said analyst Stuart Duncan.
“In combination with the trend towards inflows into pooled funds as opposed to segregated mandates, this changing mix is expected to benefit revenues by £15m annually.”
The current share price has exceeded the broker’s initial estimate of 210p, but it believes that there is some upside to that as “cash generation is improving and the Asia Pacific franchise should be regarded as an increasingly valuable asset to the group given its scale,” Duncan added.
Financial services firm Matrix says that property group London and Stamford’s (L&S) shares may have performed well over the last three months and outperformed the sector by 9.9%, but it still likes the company for medium-term growth and confirms its positive stance on the stock.
Although no new acquisitions have been made this year, the broker highlights that L&S has a significant £1bn of firepower for new purchases and has been noted in the property press to have been bidding on assets such as Chiswick Park.
“Management notes that the availability of investment stock is rising and opportunities exist to make attractive returns,” says analyst Miranda Cockburn. “In the meantime, it will concentrate on securing additional value from its existing portfolio via asset management.”
With the shares trading 11.3% higher than three months ago, the broker maintains a ‘buy’ and 133p price target, noting that it is reviewing its 12-month rating.
or share it with one of these popular networks:
You are here: news