We reiterate ‘Hold’ on Right move PLC and revise the target price from 4239 p to 4200p. In our last insight on Rightmove PLC , last month, we had given the target price of 4239 p. Post our insight, the stock had made the lows of 3400 p and after consolidating at 3400 pence, it had risen back to 4139 pence. The stock finished trading on the London stock exchange at 3931 pence on 15th March 2016. Based on earnings estimates for the company's fiscal year ending in December 2017, the stock has a price-to-earnings ratio of 26.71 which is quite high compared to FTSE100 12 month forward P/E of 13.37. The stock has a trailing price to earnings of 37.4. Based on the analysis of forward P/E compared to FTSE 100 the stock seems slightly overpriced. Based on the technical analysis, the stock is trading above 20 days, 50 days and 100 days moving average of 3846p, 3833p and 3883p respectively. Technically, we see the stock hovering in the range of 3734 p to 4130 pence. Any breakout above 4130 pence indicates new highs and any breakdown below 3734p indicates another lows. Therefore, the traders and investors shall watch these levels carefully.
2015 Fiscal results highlights: (Read more)
A raft of measures unveiled in the 2016 budget is set to benefit investors in UK equities and have the potential to shift investing patterns on the LSE in the coming weeks. The main measure will concern changes to the way capital gains will be calculated, which is the tax investors pay on gains made by selling shares as a proportion of the value increase accumulated since buying shares. The basic rate of capital gains tax will fall from 18% to 10% from April this year, while the higher rate will fall from 28% to 20%. Translating with a practical example, for a £10,000 gain (above the £11,100 tax-free allowance) a basic-rate taxpayer would with the current system be left with £8,200 after tax, and a higher-rate or additional-rate taxpayer with £7,200. Under the new rules, the basic-rate taxpayer would be left with £9,000 and the higher (or additional) rate taxpayer with £8,000. (Read more)
Marks and spencer (M&S) is one of the leading UK’s retailors with over 1330 stores worldwide. The Company has over 798 stores across the United Kingdom in high streets and retail parks, as well as stations, airports and other locations ranging from out-of-town and flagship stores of over 100,000 square feet to Simply Food stores of around 7,000 square feet. The Company has over 455 international stores in 54 territories across Europe. M&S is a ‘Hold’ with a potential upside of up to 20% from the current levels. According to the data from yahoo finance, the stock has a forward P/E of 15.96 compared to FTSE100 forward P/E of 13.37. The stock has a trailing P/E of 13.87. It finished trading on London stock exchange on Monday 25th January at 420 pence a share. However as per the analysis of stock’s forward P/E compared to FTSE 100 P/E, the stock seems slightly overpriced, that’s why we don’t see much upside in M& S from the current price levels.
M&S has mainly 2 divisions i.e. Food and general merchandise. 57% of the revenue attributes to the food division and rest of the revenue comes from general merchandise. Currently, the stock has been trading below 20 days and 50 day moving average of 432.7 pence and 467.7 pence respectively. However, the stock prices have stumbled a lot post November and they have come down from 540 pence to 410 pence lately. But, now it seems that stock prices have started consolidating at the current levels and we see the prices range bound between 420 p – 450 p in the near future. The stock would face resistance at 440 pence and the next resistance is seen at 457 pence. However, the stock seems to have very strong support at 410 pence and in case of stock breakdown below 410 pence, it will be an alarming signal for the bulls and they need to hedge their positions or trade with a strict stop loss. M&S has a consensus rating of ‘Hold’ and an average target price of 534 pence. However, our target price is slightly below the consensus target price which would be discussed in the later part of the article. (Read more)
Vodafone PLC is pretty fairly priced at the current levels and we do not see an upside of more than 15% from the current price levels. According to the data from Morning star.com, the stock has a forward P/E of 40.4 compared to FTSE100 12 months forward P/E of 13.34. This also indicates that the stock is slightly overpriced at the current levels. Currently the stock has been trading above its 50 day and 100 day moving average of 217.68 p and 217.9 p respectively. We expect the stock to be range bound between 220 p -245 p in the coming quarters and fiscal year. Vodafone Group Plc (Vodafone) is a mobile communications company which provides services to mobile voice, messaging, data and fixed line. It has a market cap of £58.80 bn.The Company also has products such as international money transfer, savings and loans, salary disbursements and access to insurance products in different markets. Vodafone is an industry leader with 446 million customers, mobile operations in 26 countries and fixed broadband operations in 17 countries. Vodafone is bringing the benefits of the mobile and digital revolution to consumers and businesses across the world, from offering 4G services in 18 countries to providing services such as machine-to-machine (‘M2M’) technology and M-Pesa, the mobile payments service that provides financial freedom to millions of people.
GlaxoSmithKline plc.is fairly priced at the current levels and we don’t see much upside in the stock from the current price levels. We expect the stock to be range bound between 1280p to 1400p in the coming quarters and fiscal year. The company has been trading in a range between 1227.50p to1645p over the past year. Based on earnings estimates for the company's fiscal year ending in December 2016, the stock has a price-to-earnings ratio of 16.6 which is slightly up compared to FTSE100 12 month forward P/E of 13.37. The stock has a trailing price to earnings of 6.81.The Stock finished trading on London stock exchange on 31st December 2015 at 1373 p a share.GlaxoSmithKline plc. (GSK) is a healthcare company that researches and develops pharmaceuticals, vaccines and consumer healthcare products and has a market cap of £66.8Bn. The Company operates in two segments namely, Pharmaceuticals and Vaccines, and Consumer Healthcare. The Pharmaceuticals segment develops and makes medicines to treat a range of acute and chronic diseases. The Consumer Healthcare business develops and markets products in four categories namely,wellness, oral health, nutrition and skin health. Its brands include Sensodyne, Panadol, Horlicks, Polident, Paradontax, Tum,ENO, NiQuitin/Nicorette, Abreva, Zovirax and Aquafresh.
Out of the two business segments, the company generates over 74% of the revenue from pharmaceuticals and vaccines. However, in the cumulative third quarter 2015 results, the pharmaceuticals turnover was down by 7% mainly because of the disposal of the oncology business to Novartis. The other business segments continued reporting strong growth reflecting the promising growth of the business. The company reported operating profit of £10,576 m in the nine months 2015 compared to £2906m a year ago. The cumulative Q3’15 results included non-core items which resulted in a net credit of £6204m , which in turn raised the operating profits to £10,576m in cumulative Q3’15. In the absence of non-recurring or non-core items, the adjusted operating profit in the cumulative Q3’15 was £4372 m compared to adjusted operating profit of £4824m, a year ago. The net credit of £6,204 m reflects the impact of Novartis transaction. This included the profit on disposal of the Oncology business to Novartis of £9,233 million, acquisition charges of £1,170 m and other restructuring costs of £1,860 m. However the company’s cash flow from operations declined to £1,068 m in the cumulative Q3’15 compared to £2,966 m a year ago. The cash flows declined mainly because of lower operating profit margins, negative currencies impact and increase in receivables from the accelerated seasonal sales of vaccines. Therefore, the company’s performance was slightly weak in the first nine months of 2015 compared to a year ago and the management expects the same in fiscal 2015 as well. However the major challenge faced by the company is the pricing pressures on Advair in the US and Europe. The company has been the leader in respiratory diseases over 40 years and Advair is one of its mature products. To strengthen the respiratory portfolio, the company has added a few new medicines such as Relvar, Anoro Ellipta and LABA dual bronchodilator, Incruse Ellipta (LAMA) and Arnuity Ellipta (ICS). (Read more)
Sirius Minerals Plc is a United Kingdom-based fertilizer development company and has a market cap of £342.5 m. The Company is primarily focused on the development of polyhalite deposit, The York Potash Project. The Company operates through two divisions: the UK segment, which consists of the York Potash related activities and the corporate operations, and the Rest of World, which includes the Company's other overseas interests.
Sirius Minerals Plc is mainly for the less risk averse investors. The UK based fertilizer producer has traded in a wide range between 6.40p-29.50p over the past one year. Currently the stock is trading at 134% above its 52 Weeks low and 97% below its 52 weeks high. Sirius Minerals finished at 15.0p a share, up 3.45% on Tuesday, 15th December 2015. The company has 50 days moving average of 17.72p and 100 days moving average of 17.63p. Sirius minerals PLC had shown a spectacular rally in the year 2015, as the shares had risen by 250% from 6.40p to 25.0p. However the stock had rallied so much mainly on account of the positive news flows regarding the proposed potash mine in York. Though there have been a few roadblocks with the decision process, but now the company has received all the required consents and can go ahead with the £1bn project. However after the spectacular rally, the stock seems to head for a correction and according to a few analysts, fiscal 2016 might not be as superb as the last year. In the November 2015, the company received an ‘outperform’ rating from Macquarie with a target price of 25 pence which indicates an upside of up to 78% from the current levels. (Read more)
National grid plc is fairly priced at the current levels, with an upside of merely 10% from the current levels. The stock has shown a spectacular rally by rising over 66% in the last 5 years, but now it seems it would start consolidating at the current levels and might head for a correction. The stock finished trading on London stock exchange at 909 pence on Friday. Currently the stock is trading at 5% below its 52 Weeks high and 11% above its 52 weeks low. National Grid Plc is an electricity and gas utility company and has a market cap of £34.14Bn. The UK Electricity Transmission includes high voltage electricity transmission networks in Great Britain. Its UK Gas Transmission provides the gas transmission network in Great Britain and UK liquefied natural gas (LNG) storage activities. National Grid has a forward P/E of 15.13 which is slightly up compared to FTSE 100 P/E of 13.37. National Grid Plc has a trailing P/E of 15.88.
The company has five business segments namely: UK electricity transmission, UK gas transmission, UK gas distribution, US regulated and other activities. Out of all the segments, the group generates 46% of its revenue from US regulated and 29% from UK electricity transmission. The company generates over 85% of its revenue from US regulated and UK electricity transmission, therefore the US is one of the biggest markets for the company. However throwing light on the latest half year results of the company, the company continued delivering strong performance in the first half of the year. The company’s adjusted EPS was up by 22% in H1’2015 compared to a year ago. The capital investment was £1.9 bn in H1’2015, up by 17% compared to a year ago. Also it reported strong balance sheet and financial matrix in H1'2015. The company reported strong operating cash flow of £2.681bn in H1’15, up by £114 compared to H1’2014. The company is also undergoing some restructuring as the company is planning to sell its major stake in the UK gas distribution business. According to the management, post-sale, National Grid’s product portfolio will have a higher asset growth and the company would strengthen its foothold to deliver strong returns in the future. Also the UK gas distribution business is a mature business model with strong cash flows and attractive return on equity. Therefore the sale of UK gas distribution business would generate attractive returns to the shareholders. The proposed sale is likely to be completed by 2017. The company has also maintained a steady dividend yield of 5% in the historical years which is a feast for an income oriented investor. Also, National grid has outperformed, compared to its peers like Centrica Plc is worth 35% less than 5 years ago whereas national grid stock has risen by 66% in the last 5 years. Currently, the stock has a consensus rating of ‘Hold’ and a target price of 914 pence. (Read more)
Rolls Royce is a compelling buy with an upside of up to 40% from the current price levels. The stock has gone through huge correction starting from April 2015 and finally it started consolidating now when last week it had given the breakout at 555 pence. The stock finished trading on London stock exchange at 598 pence on Thursday. Currently the stock is trading at 43% below its 52 Weeks high and 19% above its 52 weeks low. Rolls Royce has a beta of 0.84 which also explains that the stock prices have been less volatile compared to the index.
Rolls-Royce plc is a United Kingdom-based company that designs, develops, manufactures and services power systems for use in the air, on land and at sea. The company has a market cap of £11 B and has two business divisions namely: Aerospace and Land & Sea. The Aerospace Division produces aero engines for large civil aircraft and corporate jets and provides defense aero engines and services. The Land & Sea Division comprises power systems, marine and nuclear businesses. The company generates 68% of the revenue from the aerospace division and the remaining 32% of the revenue is attributable to the land and sea division. (Read more)
BP PLC is fairly priced at the current levels considering the weak performance of the company in 2015 so far. BP PLC is trading 52% above its 52 W low and 22% below its 52 W high. The company finished trading in the London stock exchange at 350p a share on Monday. However, based on the fundamental analysis and valuation we do not see an upside of more than 25% from the current levels. BP p.l.c. is an integrated oil and gas company and has a market cap of £ 70.66 b. The Company provides its customers with fuel for transportation, energy for heat and light, lubricants and the petrochemicals products used to make everyday items, including paints, clothes and packaging. The Company has three business segments namely, Upstream, Downstream and Rosneft. However, over 80% of the company’s revenue generates from the downstream segment. The Company's Downstream segment's activities include the refining, manufacturing, marketing, transportation, and supply and trading of crude oil, petroleum, petrochemicals products and related services to wholesale and retail customers.
Like the other oil and gas companies, falling oil prices is a big concern for BP PLC also, as it got validated by the weak 2014 and cumulative third quarter 2015 results respectively. The company’s topline fell in 2014 compared to 2013 mainly because of falling crude oil prices and lower volumes. However the silver lining in the cloud was the company’s strong balance sheet and gearing ratio within the target range of 20%. The company had a gearing ratio of 16.7% in 2014 which indicates towards its financial stability. Despite the challenging macro and tough market conditions, BP PLC reported positive cash flow from operations in the first nine months of 2015. BP PLC reported positive cash flows from operations in cumulative third quarter 2015 at $13.327 B versus $25.507 B. Though cash flows have fallen significantly compared to the last year on account of volatility in the oil prices. BP PLC would seem to be on track once we see some stability in the oil prices. Another good thing about the oil and gas giant is the stable and steady average dividend yield of approx. 6.5% in 2013 and 2014 respectively. Despite the negative earnings in 2015 so far, company has full plans to maintain the same in the coming fiscal years as well. BP PLC has already announced the dividend of 30 cents per share in cumulative third quarter 2015. (Read more)
2015 isn’t associated with large scales of activity in the stock market: indeed, since the summer investor panic in Asia and the perennial fret over the weakness of the recovery globally, and in particular in the Eurozone, prudence has reigned amid investors and in company boardrooms. Volumes of mergers and acquisitions have been low, while fewer companies have chosen to go public. So it is significant that a market maker specializing in stock flotations and M&As has posted surprisingly positive annual results. Numis Corporation (NUM:LN) , which has its stated goal as being the advisor of choice for UK companies, has seen its revenue increase from £92.9m to £98.0m and statutory profits before tax soar from £24.4m to £26.1m.
Shares in the brokerage and advisory firm, which trades in the LSE’s AIM, rose by almost 4% in earnings per share to 24.9 p since publication of its yearly results. According to media estimates 8,986 shares were exchanged during intraday trading. The CEO, Oliver Hemsley, stated that “the performance of the stock market was variable during the year but our high quality client base was active and our current deal pipeline is strong. By strengthening our franchise across UK companies of all sizes, we have established Numis as an advisor of choice for businesses seeking capital to grow." (Read more)