There’s a notable consensus across a number of Thursday’s downgrades, with multiple brokers seeing G4S Plc (LON:GFS) and Restaurant Group (LON:RTN) lower.
“Another messy set of numbers” was how RBC Capital analyst Andrew Brooke described Wednesday’s full year financial results from G4S. Brooke highlighted the security group’s higher debts and increased write-offs in particular.
“Management is now going to dispose of more businesses to bring the gearing levels down, but we feel it should have bitten the bullet and raised some new money,” he said in a note.
“We bring forecasts down again and despite the share price fall remain negative on the shares.”
RBC cut its price target for G4S to 170p from 190p (current price: 185p), and repeated a ‘buy’ recommendation.
Barclays Capital and Nordea share RBC’s pessimism, as they both downgraded the security firm as well; the former drops to ‘equal weight’ from ‘overweight’ while the latter now sees it as a ‘sell’.
Elsewhere, Goldman Sachs downgraded The Restaurant Group (LON:RTN) to ‘neutral’ from ‘buy’ and Berenberg cut it to ‘hold’ from ‘buy’.
JP Morgan repeated the ‘hold’ recommendation that it previously had.
RBC also looked at a number of natural resources stock with Firestone Diamonds PLC (LON:FDI), Gem Diamonds (LON:GEMD) and Genel Energy (LON:GENL) all seeing downgrades.
Firestone saw its price target cut to 35p from 40p.
Des Kilalea, an analyst at RBC, said he ‘wouldn’t be surprised’ to see Gem put impairments against mine assets in next week’s results. The broker’s ‘outperform’ rating for Gem still stands, though the price target is clipped to 170p from 190p.
Genel Energy is described as a ‘a niche play within a niche sector’ by analyst Al Stanton, who said investor confidence has been tested by recent events for the Kurdistan based oil producer.
“We believe a recovery requires sales growth, a de-risking of its gas developments...and time,” he added.
RBC downgraded Genel to ‘sector perform’ from ‘outperform’, and the price target drops from 400p to 115p.
At the other end of the scale, Cairn Energy (LON:CNE) say its targets moved higher by both Barclays Capital and Deutsche Bank. The former’s target increased to 190p from 180p while the latter’s is lifted to 220p from 200p (current price: 204p) – they rate the oil firm as ‘equal weight’ and ‘buy’ respectively.
Deutsche Bank upgraded targets for Prudential (LON:PRU) to 1,620p from 1,565p and repeated a ‘hold’.
Premier Inn and Costa Coffee owner Whitbread (LON:WTB) was upgraded to ‘hold’ from ‘underperform’ by Jefferies International with its target price rising to 4,100p from 3,600p.