This morning’s interim results confirm Jimmy Choo PLC (LON:CHOO) as one of the highest growth stocks in the luxury sector, according to Liberum.
The broker reiterated its ‘buy’ recommendation and said there is a good probability that full-year forecasts would see upgrades following the half-year update.
Read Jimmy Choo has "never looked better" as Brexit leaves a spring in its step
Like-for-like sales were down 4% on a year earlier, but this was down to extensive remodelling of the store portfolio and tough comparative figures for the shoe shifter, while US market conditions did not help.
Jimmy Choo is valued at 19 times forecast earnings, which is broadly in line with the sector, yet Liberum’s forecast of 20% compound annualised growth in three year EPS CAGR is more than double that of the peer group.
Solid results and the outlook underpin Deutsche Bank’s bullish stance on marketing and advertising giant WPP group PLC (LON:WPP).
Deutsche Bank likes the way WPP grinds
Yesterday’s interims were described by WPP’s management as an example of the company “grinding it out”.
Read WPP's Sir Martin Sorrell says group "grinding out" growth despite Brexit
Deutsche said the “grind” is a balance of low single-digit percentage top-line growth, margin improvement and the deployment of cash on bolt-on acquisitions.
“This is a grind that we like,” the German bank said, as it lifted its target price 7.7% to 1,890p, based on upgrades to earnings estimates and a re-rating of the peer group.
JP Morgan Cazenove is a bit more equivocal, with an ‘overweight’ rating on WPP.
The marketing firm posted strong operational metrics, while the so-called Brexit vote is having a more muted effect than Cazenove had expected.
“Digital net sales continue to grow strongly at the group level (+7.1% y/y in H1 [year-on-year in the first half] 2016), which presents greater value opportunities for WPP but it also drives greater competition from ‘Frenemies’ such as Accenture and Deloitte,” Cazenove said.
The same broker has downgraded support services and construction outfit Carillion PLC (LON:CLLN).to ‘underweight’.
First half results showed positive progress in Support Services, with organic growth and margin expansion, but this was offset by the subdued Middle Eastern construction business, which was a contributory factor to profit before tax being 4% below Caz’s estimate.
Balance sheet items weigh on the stock; nevertheless, Cazenove has lifted its price target to 250p from 225p.
Barclays no longer overweight on Just Eat
Just Eat PLC (LON:JE. has served up consistent upgrades since its floating, with consensus underlying earnings (EBITDA) estimates for the current financial year having risen some 80% since May 2014, Barclays notes.
“While we still see some upside to Just Eat's conservative guidance as it continues to outmanoeuvre the competition, this is likely to be at a slower pace. The rate of growth in UK orders is dropping and, with a tough Q3 comp, this could come under increased scrutiny,” the bank warned.
It has upgraded its estimates and price target (to 630p from 550p) to reflect the strong execution in the first half of 2016, but given the out-performance of the shares over past months, this is not enough to maintain its ‘overweight’ rating, which moves to ‘equal weight’.
Never mind Brexit, what about Bricks-it?
N+1 Singer has flagged up a report that claims a chronic brick shortage in Britain is ramping up house prices and the situation could be made worse by the Brexit vote.
The supply of the vital building material is failing to keep pace with the demand for homes, exacerbating Britain's housing crisis, according to the National Association of Estate Agents' (NAEA) Bricks Report.
“Doesn’t sound to me like a sector where stocks should be trading on lowly ratings,” opines N+1 Singer’s Jamie Constable.
Constable suggests the likes of Ibstock PLC (LON:IBST), Forterra PLC (LON:FORT) and Michelmersh Brick Holdings Plc (LON:MBH) should be on higher ratings.
“Analysts currently have profits falling 2017 on 2016 for the first two stocks. Is that right given likely government continued stimulus for the housing sector?” Constable asks.
Haydale expands capabilities
Haydale Graphene Industries PLC (LON:HAYD) has announced the intention to acquire Innophene, a Thailand based business focused on the production of graphene-enhanced conductive ink and composites.
It will pay £310,000 to be satisfied by the issue of shares.
Read Haydale Graphene makes strategic Asian buy
“This news flow is positive, providing Haydale the base for a centre of excellence in the Far East and expanding capabilities into graphene-enhanced transparent conductive inks and PLA resins,” said Cantor Fitzgerald, which rates the shares a ‘buy’, with a price target of 220p.