Expert opinion: HSBC, Tesco, London Stock Exchange, Fever-Tree and Whitbread
Our daily summary of analyst and fund manager comments on stocks.
|Market capitalisation||£ 89,396 million|
|Number of shares||20,313 m|
|Volume (average 90 days)||27.89 m|
|Cash per share||$ 0.13|
HSBC in an enviable position, according to Hargreaves
HSBC (HSBA) released a positive quarterly update and thanks to its diversified business model, the Asian-focused banking giant is in a “more enviable position” than its peers, according to Hargreaves Lansdown.
Although revenue fell 1% to $ 12.2 billion in the third quarter, profit before tax fell from $ 3.1 billion to $ 5.4 billion year-on-year.
Analyst Sophie Lund-Yates said HSBC is “a giant in its industry” and that with “signs of more positive economic conditions, better results are being achieved”, with profits supported by “huge variation in losses expected credit “.
The group will also benefit from an anticipated increase in interest rates, which improves the profitability of loans.
“Overall the situation looks healthier for HSBC, but as long as interest rates remain at the bottom, the group will continue to be held back,” Lund-Yates said.
“One thing the group has going for it is a very diverse business model, which means that when one area is struggling another can take over. Both its sprawling geographic footprint and alternative banking activities… mean HSBC is in a more enviable position than others. ‘
HSBC shares rose 1.9%, or 8.3 pence, to 443 pence on Monday.
|Market capitalisation||£ 21,099m|
|Number of shares||7,725 m|
|Volume (average 90 days)||16.01m|
|Cash per share||-2.11p|
Tesco cyberattack does not deter Shore Capital
Tesco (TSCO) suffered a cyberattack on its website, but Shore Capital says it does not affect the broker’s “positive stance” on the supermarket giant’s shares.
Clive Black reiterated his ‘buy’ recommendation on the stock, which was up 1.1%, or 3p, to 274p on Monday after Tesco faced a disruptive cyber attack over the weekend online commerce in the UK. The website was back up and running on Monday morning, but with reduced functionality.
Black said that “all indications to date suggest that no customer data has been compromised” and “we feel this has been a fairly tightly controlled challenge for Tesco.”
“While they are not ideal and note the propensity for such attacks to cost often more than initial indications often show, the events of the weekend do not adjust our positive stance on equity. Tesco, which we refreshed after a very good interim update earlier this month which led to the welcome start of the current buyout activity, ”he said.
|Market capitalisation||£ 26,528 million|
|Number of shares||350m|
|Volume (average 90 days)||0.79 m|
|Cash per share||181.61p|
Berenberg considers LSE rating opportunity
Berenberg believes that it is possible to revalue the shares of London Stock Exchange (LSEG) despite a “trivial” update.
Analyst Peter Richardson kept his buy recommendation and his £ 100 target price for the stock, down 2%, or 152 pence, to £ 74.48 on Monday.
“The recent LSE revenue update was, at first glance, trivial,” he said.
“Specifically, the company’s third quarter 2021 revenue was in line with consensus, while guidance for the full year 2021 and beyond was unchanged.”
Despite the online update, stocks fell 6% early in the session, which Richardson said reflected “the fragility of investor confidence in LSE earnings beyond 2021.”
“While we think the consensus is too low, the main driver of the LSE share price over the next six months is likely to come from investor confidence,” he said.
“We believe it will get easier in early 2022 and with the LSE trading at 21.9 times our FY2022 earnings per share – a roughly 15% discount from the equity sector -” [this] can help support a revaluation of stocks.
|Market capitalisation||£ 4,206 million|
|Number of shares||134m|
|Volume (average 90 days)||0.7 m|
|Cash per share||33.53p|
Whitbread could spark interest in deals, Peel Hunt says
Pentecost bread (WTB) “invests through pain,” which Peel Hunt says may attract interest from private equity.
Analyst Ivor Jones reiterated his buy recommendation and £ 36 price target on the owner of the Premier Inn hotel chain, whose share price rose 1.1%, or 34p, to 31 , £ 55 Monday.
“Whitbread is building on its strong balance sheet and investing in growth,” he said.
The group is renovating hotels, adding Premier Plus rooms and continuing to expand in Germany.
“Long-term value creation is clear and that, in addition to asset backing, could attract private equity,” Jones said.
“Despite the possible short-term challenges associated with the trade disruption of Covid-19, we reiterate our ‘buy’ recommendation.”
Jones said the ointment could come from rising energy prices, which management is likely to “be cautious about”, but it remains “positive over the long term.”
|Market capitalisation||£ 2,833 million|
|Number of shares||116m|
|Volume (average 90 days)||0.78 m|
|Cash per share||55.64p|
Royal London’s Marwood Reduces ‘Tricky’ Fever-Tre
Royal London UK Dividend Growth manager Richard Marwood reduced his position in Tree fever (FEVR) because he believes the margins of the high-end mixer group are becoming “more difficult” to predict.
In the fund’s latest factsheet, the A-rated manager of the £ 1billion fund said he had made a number of additions to the portfolio which were “largely funded by reducing our position in Fever-Tree ”.
“We continue to believe that the brand has growing international appeal, but that margins are more difficult to predict in the short and long term, making the risk / reward ratio more balanced at current valuations and an appropriate lower weighting.” , did he declare.
Fever-Tree shares were down 1.8%, or 43p, to £ 23.82 on Monday.