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(Sharecast News) - Analysts at Berenberg lowered their target price on British Airways parent International Consolidated Airlines from 375.0p to 300.0p on Monday but said IAG's planned equity raise paved the way for "unrivalled consolidation" and dividend flexibility.
Berenberg said IAG's leverage and liquidity will likely return to palatable levels by 2022 and stated its sensitivity analysis suggested pro-forma price-to-earnings ratios will remain more than 10% below mid-cycle levels.
However, while the German bank cut its estimates on an expected slower revenue trajectory to one-third below 2019 levels, Berenberg thinks there will asymmetric upside in IAG's shares and opted to retain its 'buy' rating on the stock.
"Even through a slow recovery, we expect opportunities from overhangs related to IAG's rights issue, the Air Europa purchase and labour/fleet restructuring to fall away," said the analysts.
Berenberg highlighted that IAG currently trades on an enterprise value to earnings before interest, taxes, depreciation, amortization and rent of 3.2x its 2022 estimates, while enterprise value to invested capital also remained "compelling" at 0.9x given that it expects the group to generate a return on invested capital in excess of the weighted average cost of capital through the cycle and in 2022 - well before its peers.
(Sharecast News) - Analysts at Berenberg slashed their target price on British sub-prime lender Provident Financial from 470.0p to 250.0p on Wednesday, stating that the Covid-19 outbreak had dealt the group another setback.
The broker noted that at the beginning of 2020, Provident Financial was starting to "find its feet again", with both Financial Conduct Authority investigations being completed, the group's Consumer Credit division expecting to breakeven, Vanquis and Moneybarn adjusting to new regulations and changes to risk appetite and dividend payments resuming.
However, the German bank said Provident's cash-based home credit division would be affected by social distancing measures and lockdowns as the group's lending agents were currently unable to visit borrowers.
"The group last lost contact with its customers in 2017 when it switched to a new operating model, leading to a divisional loss of ?111m in six months, although the loan book was larger (c?400m versus ?250m). Both collections and new sales were heavily affected," said the analysts.
Also likely impacting Provident's capital position was Berenberg's assumption that the group's Vanquis and Moneybarn arms were likely to see arrears "beyond those experienced in previous economic contraction".
While Berenberg said it believes that Provident's capital position was sufficient for now, and that arrears in Vanquis and Moneybarn would be tolerable, it warned that a long period of lockdown would mean home credit incurs "significant losses".
Berenberg maintained its 'hold' recommendation on Provident.
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https://www.providentfinancial.com/media/newsroom/2019/q3-trading-update/
Berenberg stays at 'buy' on BP, says higher shareholder returns may arrive with full-year results
Berenberg sounded a positive note on shares of BP on Tuesday following the oil major's third quarter trading statement.
Source: Sharecast
In their judgement, financial markets had been loooking for a higher quarterly dividend instead of the playout that was finally announced, which might have disappointed some shareholders.
However, they believed that an announcement on further shareholder returns might now come alongside its full-year results, highlighting that BP's new chief executive officer would be in place by then.
Furthermore, they described the company's $6.4bn quarterly cash flow - pre-Gulf of Mexico payments and before working capital requirements- as "strong".
"Overall, we view this as a positive set of results, with strong underlying cash flow generation and a solid operational beat relative to reduced expectations for the quarter," the German broker said.
With the shares changing hands on seven times' their estimate for the outfit's enterprise value-to-debt-adjusted cashflow, they reiterated their recommendation to 'buy' and 600.0p target price.
For their part, analysts at RBC said the firm's decision to eliminate the scrip dividend option, instead of giving into calls for higher returns, was a "prudent step" given where the company's balance sheet was at, with gearing of roughly 35.6% "well above" the usual range.
RBC was at 'outperform' on the shares with a 550.0p target price.
"We remain constructive on BP for its medium-term growth profile and improving cash flow framework," RBC said.
"This growing profile should, over time, lead to improving returns. In the near term, we expect the focus to be on de-levering the balance sheet."
WM Morrison Supermarkets (LON:MRW) Receives “House Stock” Rating from Shore Capital
Posted by Irma Garcia on Oct 7th, 2019
WM Morrison Supermarkets PLC logoShore Capital restated their house stock rating on shares of WM Morrison Supermarkets (LON:MRW) in a research report sent to investors on Thursday, September 12th, Digital Look reports.
Other equities analysts also recently issued research reports about the stock. Deutsche Bank reaffirmed a hold rating on shares of WM Morrison Supermarkets in a research note on Friday, July 12th. Barclays reaffirmed an underweight rating on shares of WM Morrison Supermarkets in a research note on Tuesday, July 16th. Jefferies Financial Group reduced their price target on shares of WM Morrison Supermarkets from GBX 265 ($3.46) to GBX 255 ($3.33) and set a buy rating for the company in a research report on Monday, August 12th. UBS Group reissued a buy rating and set a GBX 245 ($3.20) price target (down previously from GBX 260 ($3.40)) on shares of WM Morrison Supermarkets in a research report on Tuesday, September 3rd. Finally, Berenberg Bank reduced their price target on shares of WM Morrison Supermarkets from GBX 265 ($3.46) to GBX 230 ($3.01) and set a buy rating for the company in a research report on Friday, August 16th. One investment analyst has rated the stock with a sell rating, five have assigned a hold rating and six have assigned a buy rating to the stock. The company presently has an average rating of Hold and an average target price of GBX 238.67 ($3.12).
Provident Financial led the fallers as analysts from Canaccord cut the stock's target price from 430p to 378p and slashed their EPS and DPS forecasts by 5%, 11% and 17% in FY19-21, respectively.
From Share News
The share news on here. ....Sharecast News) - Sainsbury's was the standout performer among the 'big four' supermarkets in the 12 weeks to 8 September, according to data from research firm Kantar.
The data showed that Sainsbury's enjoyed its best period since October 2018 and outperformed its peers for the second month in the row despite a 0.1% sales dip. Sales at Tesco dropped 1.4%, while sales at Morrisons and Walmart-owned Asda declined 2% and 1%, respectively.
Decided 5.6% profit in a week worth taking so out. See how bad results are on Thursday.
2190 @ 179.278 for long term or takeover
Legal & General (LSE: LGEN) might not be the most exciting business in the FTSE 100. However, if you are looking for stocks to include in your retirement portfolio, then this boring business should undoubtedly be on your watchlist.
What I like about this pension and savings provider is the fact that it is a business with long-term investing at its heart. The company has been around for more than 100 years and during this time, it has become a stalwart of the UK financial sector. It manages more than £1trn of assets for clients around the world and was the first UK asset manager to meet this lofty target.
Focused business
Life insurance and pension management is a tricky business because there is so much that can go wrong.
Legal promises clients an income in retirement, and the company cannot afford to renege on this promise. So, management has to invest clients’ money sensibly with a three or four-decade time horizon to make sure that when the time comes, it can meet its obligations.
Sensible, long-term investing is the name of the game for the company, and that’s why I think it could make a perfect addition to your pension portfolio. At the time of writing, shares in the group trade at a forward P/E of just 6.9 and support a dividend yield of 8.3%. I think that’s a steal for such a high quality, FTSE 100 business with more than 100 years of history behind it.