Broker spotlight
Diageo (LON:DGE) was a top riser today after RBC Capital slapped a big upgrade on both its investment view and price target.
The broker said it doesn’t matter if Brazilian private equity group 3G Capital's purported takeover interest is genuine or not, what is more important is that it's a credible story and should prompt management introspection.
“Selling off beer wouldn't make much difference, but there is a substantial cost saving opportunity.
Forecasts for margins and earnings per share have been raised while the price target jumps 24% to £21 from £17. ‘Outperform’ is the new rating.
Peel Hunt has trimmed its rating on cake and cafe chain Patisserie Holdings (LON:CAKE), despite the broker being very impressed with progress.
“Management has achieved much: improving margins in Philpotts, self-funding the opening programme from operating cash flows, and developing a more flexible format.”
But the company’s rating is high enough to suggest some short-term consolidation is likely, so ‘hold’ (from buy) is the recommendation with a 328p target price.
Jefferies has updated its price targets across the oil exploration & production (E&P) sector to account for the rise in Brent crude recently to US$60 a barrek (from $52/b).
Net asset value-based price targets for producers Tullow (LON:TLW), Premier Oil (LON:PMO), Soco (LON:SIA) and IGas (LON:IGAS) have all been nudged up, though Cairn Energy (LON:CNE) is Jefferies’ top pick, even before today’s announcement of a merger between Indian associate Cairn Energy and Vedanta.
The US broker especially likes Cairn’s exposure to a “material (330mmb)” early stage oil development appraisal opportunity offshore of West Africa (Senegal), which it sees offering significant upside potential for the share price.
German bank Berenberg has puffed up its target price on British American Tobacco (LON:BATS) to 4,000p from 3,850p and repeated a 'buy'.
It comes after news on Friday that Reynolds American (RAI) had closed its purchase of Lorillard. As part of the deal BATS retains its holding in US firm Reynolds at 42%.
The broker reckons the deal gives 5% upside to BAT's EPS from the current Bloomberg consensus of 226p.
Low cost carrier easyJet (LON:EZJ) saw shares sink to bottom of Footsie today, as RBC Capital Markets lowered the stock to 'underperform' from 'outperform'.
The target is 1500p.
Also in brokerland, Unilever (LON:ULVR), the multinational, receives a thumbs down from heavyweight JP Morgan Cazenove as it moved the target price to 2,770p from 2,900p and repeats an 'underweight' rating.
Orosur Mining’s (LON:OMI) latest update should be taken as a positive , especially the fact the open pit operations have been able to provide more ore than originally planned.
This will allow some production from the higher grade Arenal underground mine to be delayed. The target price is 32p, based on mining and financial metrics taken from OMI’s peer group of London-listed gold producers. Buy is the rating.
What the papers say
Daily Mail
Jobs fears at Boeing as US firm cuts millions off bid to build Apache attack helicopters for MoD: American aircraft maker Boeing, fighting to win a contract to supply 50 Apache attack helicopters to the Government, has slashed the £1 billion bill in an attempt to squeeze out rival AgustaWestland.
Trouble for Tesco as Moody’s says supermarket giant needs £5 billion to get back on track: Tesco must raise £5 billion in fresh capital to shore up its finances, according to ratings agency Moody’s.
Net-A-Porter bags first profit for five years as annual sales reach over £650 million: Luxury online retailer Net-A-Porter has made its first pre-tax profit since being snapped up by Swiss giant Richemont five years ago.
Luxury investment firm The House Britannia prepares for float on stock exchange: The House of Britannia – the luxury investment firm that owns glove-maker to the Queen, Cornelia James – has bolstered its board ahead of plans to list on London’s main market next year.
After a few nightmares, Margate’s leisure park Dreamland is set to re-open: There have been years of legal battles and millions of pounds in investment, and now Margate’s famous leisure park Dreamland will open its doors on Friday to a sell-out crowd.
Merchant bank Close Brothers sets an example as it launches scheme to help firms to take on apprentices: A merchant bank is urging other financial institutions, big firms and charities to follow its example and help small and medium-sized enterprises take on apprentices.
The Times
Patisserie Valerie plans expansion into Ireland: When the Belgian-born Madame Valérie decided to introduce the English to continental patisserie in 1926, she is said to have enjoyed instant success, even surviving the destruction of her first premises in Soho’s Frith Street during the Blitz.
Virgin needed Delta to fly to the rescue, Branson admits: Virgin Atlantic would be in “real trouble” without strategic support from its American partner, Sir Richard Branson has admitted.
Company pensions bill is greater than GDP at £2 trillion: The bill for private pensions is now greater than Britain’s entire annual output, according to a report.
Critics still not sold on AIM’s 20-year story: This week marks the 20th anniversary of the creation of the Alternative Investment Market, but the bubbly will taste a little bitter-sweet around the Square Mile. Amid the celebrations will be acknowledgement that this has not been a vintage year.
It’s a swizz: clients accuse IG over Swiss franc losses: A group of IG clients who racked up millions in losses after betting against the Swiss franc have escalated their dispute with the online trading group, alleging that it is guilty of “systemic failures” in its treatment of customers.
Vedanta owner finds a rich seam of extra funding: Anil Agarwal is restructuring his empire to give Vedanta Resources, the debt-laden FTSE 250 miner that he controls, access to billions of dollars of fresh funds.
Online retailer The Hut donated to Tories before PM’s visit: A fast-growing online retailer backed by Sir Terry Leahy and Lord Rose of Monewden made a donation to the Conservative party ahead of a pre-election visit to the company by David Cameron and George Osborne, the company’s annual accounts show.
Net-a-Porter could list in London after sale to Yoox: A Swiss-owned fashion web site, founded by an American and being sold to an Italian company, could end up on the London Stock Exchange.
The Independent
Thousands of apprenticeships lost in key industries including construction and IT: There has been a sharp fall in the number of apprenticeships in the construction and IT sectors over the past five years, which could prompt parliamentary scrutiny.
Greece crisis: Risk of Greek euro exit rises as Brussels talks fail to agree deal: Germany has given its most explicit warning that Greece could leave the Eurozone as officials were reported to have failed to hammer out a last-minute deal in Brussels.
The Daily Telegraph
Syriza Left demands ‘Icelandic’ default as Greek defiance stiffens: The radical wing of Greece’s Syriza party is to table plans over coming days for an Icelandic-style default and a nationalisation of the Greek banking system, deeming it pointless to continue talks with Europe’s creditor powers.
Wages predicted to increase at fastest rate since financial crisis: Real wages are expected to have grown by their fastest rate since October 2007, according to official figures published later this week.
Rush to buy after Conservative victory pushes house prices to record: House prices have shot up to record highs after the Conservative election victory triggered a rush to buy in an over-crowded market.
LSE head: ‘abolish stamp duty on listed shares’: The chief executive of the London Stock Exchange has called on the government to abolish stamp duty on all listed shares ahead of the Summer Budget next month.
Tesco and Morrisons receive lion’s share of supermarket complaints from suppliers: Tesco and Wm Morrison have received the most complaints from suppliers in the grocery industry about their conduct, according to a Daily Telegraph analysis.
Bank reform must reflect changes since crisis, says Liikanen: Policy makers must consider the changes to banks that have put in place since the financial crisis before pushing ahead with plans to separate their retail and investment arms, according to a key architect of European bank reform.
Bond rout spells disaster for stock markets as global credit kraken awakens: Global stock markets are totally unprepared for a return of rising interest rates, and that could lead to a melt-down in equity prices.
Britain beats America for female start-up bosses: Start-up entrepreneurs in the UK are five times more likely to be female than in the US, with a third of the nation’s new businesses boasting a female founder.
Russian business to mend bonds broken by sabre-rattling politicians: A rebellious Russian entrepreneur is attempting to repair his country’s damaged reputation on the global stage by creating strong trade links with Russia’s political adversaries.
Mobile banking has eclipsed branches and even the rest of the Internet: Britons are now checking their bank balance on their mobile phones more than anywhere else, leaving more traditional services like a visit to the high street branch in decline.
The Guardian
Unison boss to tell government that efforts to crush unions will fail: The boss of the largest public sector union will tell the government this week that its efforts to crush union power will fail, after a successful recruitment drive in newly privatised businesses.
UK tax authorities pay record £605,000 to informants: The amount of money paid to informants by HMRC in its attempts to crack down on tax evasion has leapt by more than 50% in a year to a record high of £605,000.
UK wages rising at fastest rate since October 2007, think tank says: Employment figures for April due later this week are expected to show the biggest rise in real wages growth for nearly eight years, according to new analysis.
Bank branch use falls 6% as customers embrace digital advances: The use of bank branches fell by 6% last year as customers channelled more transactions over phone networks and the Internet, according to a report published on Sunday that predicts the use of smart phones and tablets will usurp branches this year.
Daily Express
Online travel agent Iglu expands as investors line up to get their share: Iglu, an online travel agent that specialises in cruise and ski holidays, said it has received an undisclosed investment from LDC.
John Lewis boosts partnerships with Rossopomodoro and Joe & The Juice: John Lewis is boosting its concession partnerships with pizza and pasta restaurant Rossopomodoro and refreshments bar Joe & The Juice this year.
Booming prices lift UK housing market and set new record for England and Wales: House-sellers’ asking prices have jumped to a new record across England and Wales.
City A.M.
No end in sight for house price boom: Average asking price for a London home soars to more than £600,000
Verdict due on Cuadrilla plans for Lancashire: Fracking firm Cuadrilla will find out whether Lancashire county planners believe the company should be allowed to progress with drilling in the region.
Grind looks to Crowdcube for £1.5 million coffee fix: Coffee chain Grind is looking to tap up latte and espresso lovers through crowd funding service Crowdcube for its next phase of expansion, after launching a £1.5 million bond issue.
Helical Bar wins tenant for former Shoreditch carpet factory: Helical Bar has pre-let two thirds of its Shoreditch-based C Space office block to DLKW Lowe.
RBS hiring drive to aid Williams & Glyn disposal: One-fifth of the hires RBS is looking to make fall within the Williams & Glyn challenger bank being carved out of the state-backed lender, illustrating the scale of the task at hand as RBS readies itself to launch the revived brand as its deadline draws nearer.
Saudi Arabian stock exchange to open up to foreign investments: The Kingdom of Saudi Arabia is opening its US$500 billion-plus Tadawul stock exchange to direct foreign investments, with the move to be closely watched by investors seeking opportunities in the Middle East.
Insurance giant Aviva to slim down with sale of property debt: Aviva, the FTSE 100 insurance firm, is said to be selling off property loans to the value of billions of pounds.