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Sunday share tips: BBGI, GlaxoSmithKline
21st Mar 2021 12:53
(Sharecast News) - The Financial Mail on Sunday's Midas column recommended shares of BBGI to its readers, calling attention to management's good track record and the firm's "rich" pipeline of potential investments.
BBGI, which is led by co-chief executives, Duncan Ball and Frank Schramm, is an infrastructure investor specialising in building and operating essential assets for the public sector.
The shares have enjoyed a good run since floating on the London Stock Exchange in 2011 and Midas believes there is far more road left to travel.
If in 2011 the company had 19 assets, now it has 50 spread across the UK, Europe, America, Canada and Australia.
Key to the investment thesis is that the outfit's compensation is tied to delivering the assets, such as roads and buildings, and not to whether how much they are being utilised.
But that does not mean that the firm does not make sure its clients are satisfied - quite the opposite.
Indeed, it has an established track record for looking after its assets and customers, Midas pointed out.
That provides visibility on earnings and dividends, during good times and bad, with an average contract life that is 20 years long.
"BBGI's motto is: boring is beautiful. But boring can also yield rewards. Ball and Schramm have delivered consistent dividend and share price growth since flotation and aim to continue doing so," Midas judged.
"For investors in search of low-risk shares in an uncertain world, BBGI, at £1.66, is a long-term buy."
The Sunday Times's Sabah Meddings put a 'hold' on shares of GlaxoSmithKline ahead of an expected June update from the firm on its plans to split into two companies.
Its chief executive officer, Emma Walmsley, outlined plans roughly a year ago to split the consumer brands unit and its biopharma arm.
That, argued Walmsley, would allow the consumer unit - which makes the likes of Sensodyne toothpaste - to take on more debt because it throws off a lot of cash.
The biopharma arm meanwhile would be free to invest in research and development.
But for the latter to do that, it needed to build up its pipeline of early, medium and late-stage drugs.
Hence, said Meddings: "The giant has to prove its pipeline can sustain a chunky dividend once it can no longer rely on toothpaste sales."
In February, the GSK had already warned that the break-up could harm its 2022 dividend, she added, sending the shares down by over 6% in a single session and they were now trading near their 2018 lows.
Yet GSK's management stands accused of overpaying in some instances, notably the $4.2bn spent on German Merck's lung cancer drug bintrafusp, which thus far had proven to be a "flop".
Much the same is said of its acquisitions of Tesaro, the oncology drugmaker that it bought in 2018 for $5.1bn, and its investment in Vir Biotechnology.
On the other side of the ledger, its Covid-19 treatment, developed together with Vir, had proven to be a success.
So too, its shingles vaccine, Shingrix, had notched up a 10% jump in sales in 2020 to reach £2bn and its respiratory unit had racked up a 22% jump in revenues to £3.7bn.
Even so, taking everything into account, Meddings said: "Expect bolt-on deals. Hold."
BBGI, which is led by co-chief executives, Duncan Ball and Frank Schramm, is an infrastructure investor specialising in building and operating essential assets for the public sector.
The shares have enjoyed a good run since floating on the London Stock Exchange in 2011 and Midas believes there is far more road left to travel.
If in 2011 the company had 19 assets, now it has 50 spread across the UK, Europe, America, Canada and Australia.
Key to the investment thesis is that the outfit's compensation is tied to delivering the assets, such as roads and buildings, and not to whether how much they are being utilised.
But that does not mean that the firm does not make sure its clients are satisfied - quite the opposite.
Indeed, it has an established track record for looking after its assets and customers, Midas pointed out.
That provides visibility on earnings and dividends, during good times and bad, with an average contract life that is 20 years long.
"BBGI's motto is: boring is beautiful. But boring can also yield rewards. Ball and Schramm have delivered consistent dividend and share price growth since flotation and aim to continue doing so," Midas judged.
"For investors in search of low-risk shares in an uncertain world, BBGI, at £1.66, is a long-term buy."
The Sunday Times's Sabah Meddings put a 'hold' on shares of GlaxoSmithKline ahead of an expected June update from the firm on its plans to split into two companies.
Its chief executive officer, Emma Walmsley, outlined plans roughly a year ago to split the consumer brands unit and its biopharma arm.
That, argued Walmsley, would allow the consumer unit - which makes the likes of Sensodyne toothpaste - to take on more debt because it throws off a lot of cash.
The biopharma arm meanwhile would be free to invest in research and development.
But for the latter to do that, it needed to build up its pipeline of early, medium and late-stage drugs.
Hence, said Meddings: "The giant has to prove its pipeline can sustain a chunky dividend once it can no longer rely on toothpaste sales."
In February, the GSK had already warned that the break-up could harm its 2022 dividend, she added, sending the shares down by over 6% in a single session and they were now trading near their 2018 lows.
Yet GSK's management stands accused of overpaying in some instances, notably the $4.2bn spent on German Merck's lung cancer drug bintrafusp, which thus far had proven to be a "flop".
Much the same is said of its acquisitions of Tesaro, the oncology drugmaker that it bought in 2018 for $5.1bn, and its investment in Vir Biotechnology.
On the other side of the ledger, its Covid-19 treatment, developed together with Vir, had proven to be a success.
So too, its shingles vaccine, Shingrix, had notched up a 10% jump in sales in 2020 to reach £2bn and its respiratory unit had racked up a 22% jump in revenues to £3.7bn.
Even so, taking everything into account, Meddings said: "Expect bolt-on deals. Hold."