logo-loader

Broker spotlight - Election, UK banks, Game Digital, Rolls Royce, ARM, Patagonia Gold...

Last updated: 12:31 23 Apr 2015 BST, First published: 11:31 23 Apr 2015 BST

downing_street_whitehall350

Brokers are now firmly focused on the likely make-up of the next government.

It was Liberum’s turn today and it reckons we are heading for some version of a Labour-led government with SNP, and perhaps Liberal Democrat, support. 

Stock winners under this scenario would be in the long to medium term it suggests. with contractors Atkins (LON:ATK) and Balfour Beatty (LON:BBY), two names it puts forward. 

On the flipside, it sees problems for Hargreaves Lansdown (LON:HL.), QinetiQ (LON:QQ,) and the building materials and housebuilding sectors generally.

UK banks are another sector that will be overshadowed by the election and Deutsche Bank expects investors to remain selective. Even US banks that reported better-than-expected results recently have struggled against a tough macro background it points out.

Lloyds (LON:LLOY) is its top pick, Barclays (LON:BARC) offers material valuation upside, Standard Chartered  (LON:STAN)  is a sell and HSBC (LON:HSBA)  and RBS (LON:RBS) are holds.

Tate & Lyle (LON:TATE), meanwhile, has problems that are unrelated to the colour or style or the UK government. Liberum welcomes its decision to pull out of European bulks, while retaining Splenda appears the least worst outcome.

The current valuation, however, places the sweeteners on a rating well above its global peers albeit on  currently depressed earnings. The broker has a target price of 545p and a ‘sell’ rating.

Glencore (LON:GLEN) is Goldman Sachs’ conviction buy in a struggling mining sector, 

There are four key reasons why Glencore should be a winner, said the US heavyweight: exposure in base metals rather than bulks; stable cash flows from marketing; a covered dividend and free cash flow; and improving credit metrics. The 12-month price target is unchanged at 340p. 

Game Digital (LON:GMD) had a tough start to 2015, but analysts at Liberum believe trading will pick up. After warning investors  in January, the video games seller posted a 1.8% dip in first half profits in March.

Margins were hit at the end of last year when it cut prices too early and too deep after it started promotions on Black Friday - a US style discounting day in November. 

“While an improved performance  over Black Friday 2015 is important, we believe that the medium term upside from Game’s strategic market positioning is under appreciated,” said Liberum’s Tom Gadsby.

The broker upped its ‘hold’ rating to a ‘buy’ and said while current trading  is soft, it sees a strong games pipeline into the autumn, and with a higher installed base of new generation consoles.

Back on the FTSE 100, Rolls Royce (LON:RR.) received two upgrades from Bernstein and JP Morgan respectively. The latter upped its share target price on the aerospace engineer from 885p to 950p.

Microchip maker ARM Holdings (LON:ARM) had its price target nudged up by RBC Capital markets after strong results on Tuesday. The broker believes shares are now worth 1330p. 

Credit Suisse stayed ‘neutral’ on Countrywide (LON:CWD) but raised its price target on the estate agency group’s shares by 54p to 552p. 

Patagonia Gold (LON:PGD) has been rated a buy with a target price of 4.5p. Times have been tough for the Argentina-based recently with the development of its flagship Cap-Oeste project put on hold. 

The mine at Lomada, though, is very much alive and the company is focused on maximising cash flows from this mine and adding reserves to extend its life.

Cameroon-based gas supplier Victoria Oil and Gas (LON:VOG) is heading towards cashflow generation with the commissioning of the Bassa and Logbaba power stations, which SP Angel said marks a watershed for the company.

 

“This is not to be sniffed at, as it means that the company is now in charge of its own future, and following a period of consolidation in which its cash resources can be rebuilt, it can start to make longer term plans as to what to do next.”

Caledonia Mining tackles 2023 challenges with optimism for 2024 as it...

Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) chief executive Mark Learmonth tells Proactive's Stephen Gunnion the company faced a challenging 2023, primarily due to poor production in the first half of the year at its core asset, the Blanket Mine in Zimbabwe, and an underperformance...

1 hour, 51 minutes ago