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The Expert View: Legal & General, Barratt and Experian

Our daily roundup of analyst commentary on shares, also including B&M and Great Portland Estates.

by Michelle McGagh on Nov 16, 2017 at 05:00

If you would like to receive news alerts on any of the stocks mentioned in The Expert View, click on the star icons below to add them to your favourites.
Key stats
Market capitalisation£15,852m
No. of shares out5,958m
No. of shares floating5,837m
No. of common shareholdersnot stated
No. of employees8253
Trading volume (10 day avg.)14m
Turnover£77,969m
Profit before tax£2,919m
Earnings per share21.13p
Cashflow per share22.17p
Cash per share431.88p

Numis backs Legal & General move into ETFs

Legal & General (LGEN) has made the right decision with its acquisition of passive fund platform Canvas that will allow it to gain footing in the exchange traded funds (ETF) space, says Numis.

Analyst Marcus Barnard retained his ‘add’ recommendation and target price of 305p on the stock after the insurer announced it had acquired Canvas from ETF Securities. It also reported its purchase of retirement village Renaissance Villages.

‘Canvas will give LGIM a presence in the ETF market, something it missed out on as the low-cost/tracking industry evolved from index funds – where it was strong – towards ETFs,’ he said.

‘We believe this looks a sensible way for LGIM to enter the ETF market, with a platform for it to launch ETFs. The acquisition of Renaissance Villages further diversified the range of investments L&G is undertaking to enhance returns.’

At the time of writing the stock was trading down 0.8%, or 2p, at 263p.

Key stats
Market capitalisation£6,279m
No. of shares out1,012m
No. of shares floating981m
No. of common shareholdersnot stated
No. of employees6193
Trading volume (10 day avg.)6m
Turnover£4,650m
Profit before tax£812m
Earnings per share60.69p
Cashflow per share61.11p
Cash per share77.87p

Barratt can close the performance gap, says Peel Hunt

There is still room for Barratt Developments (BDEV) to close the gap between its share price and its peers, says Peel Hunt.

Analyst Clyde Lewis retained his ‘add’ recommendation and target price of 670p on the stock after a ‘steady start to the new year left the forward rder book up 8% and management confident about delivering a good performance in full-year 2018’.

The shares were trading down 0.2%, or 1.5p, at 627p at the time of writing.

‘The shares have performed well in 2017 year-to-date with a 36% rise, in line with the sector,’ said Lewis.

‘They are currently trading on a price/net asset value of 1.67x, an 8% discount versus the sector average for current year 2018. This reflects the weaker than average return on equity, but we continue to believe there is some medium-term margin upside, which should see the group close the performance gap.’

Key stats
Market capitalisation£14,804m
No. of shares out926m
No. of shares floating921m
No. of common shareholdersnot stated
No. of employees15587
Trading volume (10 day avg.)2m
Turnover3,293m USD
Profit before tax1,252m USD
Earnings per share0.65 USD
Cashflow per share1.01 USD
Cash per share0.07 USD

Hargreaves: ‘excellent’ growth prospects at Experian

Credit scoring company Experian (EXPN) is a ‘vital cog’ in the economy but its main challenge will be keeping the hackers at bay, says Hargreaves Lansdown.

Organic revenue grew 4% in the first half of the year boosted by the business-to-business division, which supplies data to organisations to help them with lending decisions. However, the consumer business ‘has gone backwards’ due to declining paid subscriptions, said Charlie Huggins, manager of HL Select UK Growth.

The biggest challenge is the threat from cyber-attacks, which are becoming more sophisticated.

‘The scale of the Equifax data security breach took everyone by surprise and the consequences have been dire. The number one priority for Experian is to ensure its data security defences are as strong as possible, so that hopefully it can avoid a similar fate to its US peer,’ said Huggins.

‘Experian is a vital cog in the global economy, enabling businesses to lend to consumers with confidence. We believe the long term growth prospects for the business are excellent, providing it can keep the data hackers at bay.’

The shares were trading flat at £16.08 at the time of writing.

Key stats
Market capitalisation£3,822m
No. of shares out1,000m
No. of shares floating800m
No. of common shareholdersnot stated
No. of employees26057
Trading volume (10 day avg.)3m
Turnover£2,431m
Profit before tax£238m
Earnings per share14.29p
Cashflow per share17.00p
Cash per share15.60p

Mid-term opportunities at B&M, says Jefferies

The retail market has been tough but homewares retailer B&M (BME) has delivered and Jefferies says there are further medium-term opportunities to come.

Analyst Caroline Gulliver retained her ‘buy’ recommendation and target price of 470p on the stock, which was trading up 0.1%, or 0.4p, at 381p at the time of writing.

‘Against a tough market, B&M delivered first-half 2018 group sales [of] +22% and UK like-for-like [of] +7.5%,’ she said.

Gulliver said as the company moved into ‘peak trading’, Jefferies’ own survey showed B&M’s potential for ‘future market share gains in both grocery and non-food’.

However, Gulliver noted that risks included ‘heightened industry competition particularly in food, pressure from online retailers, foreign exchange pressures, operational expenditure pressures [and] unsuccessful rollout in Germany’.

Key stats
Market capitalisation£2,039m
No. of shares out327m
No. of shares floating321m
No. of common shareholdersnot stated
No. of employees101
Trading volume (10 day avg.)1m
Turnover£122m
Profit before tax£58m
Earnings per share-42.91p
Cashflow per share-42.63p
Cash per share7.81p

Liberum: Great Portland too expensive

Liberum rates Great Portland Estates (GPOR) but thinks the portfolio is expensive and exposed to a softening cycle.

Analyst David Brockton retained his ‘hold’ recommendation and target price of 660p on the stock after first-half results confirmed ‘stable conditions’ and a 1% portfolio valuation increase, which was ‘marginally stronger than we anticipated’.

‘We continue to rate Great Portland Estate’s management, assets and counter-cyclical strategy highly, but equally still view the asset values attached to the portfolio as expensive and susceptible to the cycle which is now softening,’ he said.

‘Positively, the risk profile is low and this will limit any downside and provide significant capital to capitalise on any correction. The shares trade on a current year 2018 price/net asset value of 0.77x versus the UK sector’s 0.83x.’

The shares were trading up 0.8%, or 5p, at 614p at the time of writing.

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Look up the shares

  • Legal & General Group PLC (LGEN.L)
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  • Barratt Developments PLC (BDEV.L)
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  • Experian PLC (EXPN.L)
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  • B&M European Value Retail SA (BMEB.L)
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  • Great Portland Estates PLC (GPOR.L)
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