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The Expert View: Boohoo, Aviva and Associated British Foods

Our daily roundup of analyst commentary on shares, also including IntegraFin and PureTech.

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Key stats
Dividend yield 0%
Market capitalisation £2,656m
No. of shares out 1,163m
No. of shares floating 769m
No. of employees 2,126
Trading volume (10 day avg.) 8m
Turnover £580m
Profit before tax £54m
Earnings per share 2.72p
Cashflow per share 4.03p
Cash per share 12.40p

Boohoo: many years of growth, says Jefferies

Online fashion retailer Boohoo (BOOH) has had an ‘excellent end’ to its 2019 financial year and Jefferies says there is plenty of room for growth in and outside of the UK.

Analyst Caroline Gulliver reiterated her ‘buy’ recommendation and target price of 280p on the shares, which jumped 10p to 226.9p yesterday.

Gross profit, earnings and profit before tax all rose 50% year-on-year, with the international division rising to 43% of the group’s sales.

‘It is worth remembering that Boohoo brand sales are still under £500 million worldwide, and group UK sales are under £500 million while US and rest of Europe, and rest of world sales are all still under £200 million,’ said Gulliver.

‘We see plenty of opportunity for the group, under new chief executive John Lyttle, to grow at its mid-term guidance of c.25% for many years.’

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Key stats
Dividend yield 7.1%
Market capitalisation £16,579m
No. of shares out 3,915m
No. of shares floating 3,904m
No. of employees 31,703
Trading volume (10 day avg.) 7.9m
Turnover £17,697m
Profit before tax £2,395m
Earnings per share 37.58p
Cashflow per share 47.86p
Cash per share 821.37p

Shore Capital: new Aviva boss has a tough job

Andy Briggs has stepped down as UK chief executive of Aviva (AV) after missing out on the top position to Maurice Tulloch, who Shore Capital says has a ‘tough job’ ahead of him.

Analyst Paul De’Ath retained his ‘hold’ recommendation and ‘fair value’ of 430p on the shares,  

‘Tulloch has a tough job ahead to inject a greater pace of change into an organisation that could still be feeling “change fatigue”,’ he said.

‘The group is the one true composite in the UK but the tangible benefits of this have yet to be exploited other than in capital diversification. Debt repayments seem a better use of excess capital than share buybacks and should help to move the return on equity closer to that of peers.’

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Key stats
Dividend yield 1.8%
Market capitalisation £20,164m
No. of shares out 792m
No. of shares floating 345m
No. of employees 137,014
Trading volume (10 day avg.) 1m
Turnover £15,574m
Profit before tax £1,860m
Earnings per share 127.47p
Cashflow per share 202.03p
Cash per share 175.83p

Primark the key to ABF success, says Hargreaves

As its sugar business struggles, Primark continues to drive Associated British Foods (ABF) and still holds the key to success, says Hargreaves Lansdown.

Half-year results from the group showed revenue up 1% to £7.5 billion but profit down 14%.

‘Sugar is proving far from sweet, but… profits are set to improve,’ said analyst George Salmon. ‘Still, it’s Primark, which accounts for over half of the capital expenditure bill, that holds the key to success.’

Salmon said the ‘constant addition’ of extra sales space at Primark was driving the top line forwards but fast fashion is slowing.

‘Primark’s pricing point means there’s a reason it’s focused solely on bricks and mortar retailing, but one can’t help but think this is holding the top line back.’

The shares rose 2.1% to £25.58 yesterday.

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Key stats
Dividend yield 0%
Market capitalisation £1,256m
No. of shares out 331m
No. of shares floating 201m
No. of employees 507
Trading volume (10 day avg.) 0.4m
Turnover £91m
Profit before tax £47m
Earnings per share 9.93p
Cashflow per share 10.12p
Cash per share 37.15p

Peel Hunt downgrades IntegraFin

Peel Hunt has downgraded IntegraFin (IHP) on ‘more limited upside’ due to stock market uncertainties.

Analyst Stuart Duncan downgraded his recommendation from ‘buy’ to ‘hold’ and increased the target price from 380p to 400p. The shares fell 2.2% to 379p yesterday.

The financial adviser investment platform delivered a rise in assets to £34.4 billion in the second quarter but flows were at a slower rate.

‘After a more challenging start to the year, markets have improved although it is too early to say whether improved sentiment will be sustained,’ said Duncan.

‘IntegraFin does have a diverse asset exposure, and this provides some protection. Net inflows remain robust and we do not believe the current short-term volatility and general macro uncertainties affect the long-term prospects.’

He added that the shares had performed well but lagged other listed platform companies.

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Key stats
Dividend yield 0%
Market capitalisation £87m
No. of shares out 48m
No. of shares floating 27m
No. of employees 155
Trading volume (10 day avg.) 0m
Turnover £21m
Profit before tax £3m
Earnings per share 1.69p
Cashflow per share 5.26p
Cash per share 2.98p

PureTech ‘significantly undervalued’, says Liberum

PureTech’s (PRTC) portfolio is being ‘significantly’ undervalued by its share price, according to Liberum.

Analyst Alistair Campbell retained his ‘buy’ recommendation and target price of 275p on the shares, which fell 1.8% to 183p yesterday.

‘We believe PureTech’s share price significantly undervalues its portfolio of healthcare affiliates and internal pipeline,’ he said.

‘Despite the 25% share price appreciation over the last 12 months, we still see 50% upside.’

Campbell said the full-year results ‘recap a year of significant clinical progress and major affiliate fundraising’.

‘The next 12 months should see further progress with several proof of concept trial read-outs and the potential for PureTech’s second US product approval,’ he said.

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