Wednesday tips round-up: Persimmon, Anite, Oracle

3rd Jul 2013 06:41

UK housebuilder Persimmon has seen its share price soar over the past two years as margins have improved, notes The Telegraph's Questor. The company, like the rest of the sector, has enjoyed strong trading with a total of 5,022 homes sold at an average selling price of 179,200 pounds in the first six months. It represented a 5.0 per cent year-on-year rise. The company said the introduction of the Help to Buy scheme by the government has boosted the sector since it was introduced on April 1st. Jeff Fairburn, Persimmon's Chief Executive, said during a conference call on Tuesday that there was "still a lot to do really, to work through" when asked for guidance over any potential upgrades. Questor said the shares have had a spectacular run, more than doubling over the last year. "Trading on a 2013 multiple of 17.6 falling to 14.6, Questor now thinks the shares are a 'hold' on valuation grounds."Anite, which makes equipment used to test mobile phones and tablets, had a bit of a wobble in March following a cautious trading statement but has recovered since, The Times' Tempus column reported. The potential for the market is staggering as the mass of orders relating to handsets and devices is now starting to flood in. However, 4G, where most of the promise lies, is still relatively undeveloped. China Mobile, for example, plans to spend $30bn on its own 4G network, and those orders will start to arrive in 18 months to two years' time. While many people own a tablet and a smartphone, there is difficulty in assessing the business as there is little forward visibility of orders. "Customers tend to request the company's products when they need them; there was something of a splurge of orders in the first quarter of the last financial year, and Anite is now lapping these, so comparators will become more difficult," Tempus muses. However, in the long run there is strong growth prospects given the sheer size of the market.Oracle has been reporting weak software revenue growth and a potshot at a rival in its earnings releases these days, according to the Financial Times' Lex column. In its first-quarter release, software licenses grew by just 1.0%. Hardly chastened, Oracle said its cloud revenue for the year, projected to be $1.0bn, would exceed that of the upstart Workday and its rival SAP combined. But, with SAP's shares beating Oracle's of late - since 2012, SAP's shares are up 32 per cent, twice Oracle's increase - SAP can only interpret Oracle's teasing as flattery. In the most recent quarter, SAP delivered total software revenue growth of 23%, with its cloud segment increasing revenue by nearly 500%. However its €1.0bn cloud revenue in 2013 and €2.0bn expected by 2015 comes from pricey acquisitions - Ariba and SuccessFactors - which together cost $8bn. Oracle spent just $4.0bn on cloud-related acquisitions for at least the same amount of revenue. "Ironically, then, the valuation gap between the two (SAP's forward earnings multiple is 16 to Oracle's 12) may come down to hardware. Oracle's $8.0bn millstone, Sun Microsystems, has brought persistent double-digit revenue declines," Lex said.RDPlease note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.