Following today´s AGM statement from on-line grocer Ocado analysts at Panmure Gordon believe there is an increased chance that it will reach a deal with peer Morrison.On the basis that this new revenue stream is worth as much as 'core' Ocado then the company´s valuation ought to be twice what it is at present, which yields a target price for its shares of 100p, to which one must add a bid premium - although the broker defines it as a 'grand assumption.' Hence Panmure´s new target price for Ocado of 130p, versus 50p previously.However, Ocado is currently priced at a generous 1.5 times its fiscal year 2013 sales, compared with 0.4 times at Sainsbury. In terms of enterprise value/earnings before interest, taxes, depreciation and amortisation costs (EV/EBITDA) it trades at 31 times. Sainsbury is at only 7 times, although ASOS is - admittedly - at 40 times. However, the latter is growing globally, is profitable, cash generative and with a very high return on capital employed (ROCE), analysts´ oft-preferred measure of a company´s profitability. "The Ocado share price has, therefore, priced in significant new revenue streams, which seems optimistic to us, to say the least," Panmure concludes. For that same reason Panmure continues to tell its clients to "sell."'Better impossible' may be the most apt title for UBS´s research note on Friday morning for retailer ASOS, except for the fact that it could conceivably get even better. In their own words, "ASOS is in a structural sweet-spot, with global exposure to the fastest growing segment of the clothing market. Management is focused on the long-term growth drivers of the business and, in our view, correctly strikes the balance between disruptive pricing, long term investment in the business and maintaining a sustainable earnings before interest and taxes (EBIT) margin."It is therefore little wonder that the Swiss broker has decided to re-start its coverage of the firm with a 'buy' rating. In fact, its analysts add that the next key launch markets of Russia and China could see further upside to their forecasts.The target price? 4,500p. BT reported very strong results on Friday morning with free-cash-flow (FCF) now expected to increase to £2.6bn by fiscal year 2015 (circa +7.5% ahead of consensus estimates) despite BT's heavy investment in BT Sport, analysts at Bank of America Merrill Lynch (BAML) highlighted. With fibre deployment still accelerating (and take-up likely to be helped by BT Sport), copper lines growing, a healthy order book in both GS and Wholesale, and mobile spectrum to differentiate its products, BT now looks to be within striking distance of its ambition to return to top line growth (in fiscal year 2015 by BAML estimates), Bank of America continued in a research note issued following the company´s release. "With the story reliant on cost cutting for the past few years, a return to growth (which is enabled by investment paid for by efficiency savings) could lead to a re-rating by the market in our view," they added.The broker raised its fiscal year 2015 earnings per share estimates for the company by 15%.As a result of all of the above they also upgraded shares of BT to 'buy', from 'neutral,' with a 325p price target, versus 275p before.AB
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