Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

The Expert View: Unilever, Rentokil and First Derivatives

Our daily roundup of analyst commentary on shares, also including BTG and Cineworld.

Click on the arrow to the right of the picture to view the slides. The arrows to the top right then allow you to move back and forth between them.

To see all the slides on the same page, click here

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Click on the arrow to the right of the picture to view the slides. The arrows to the top right then allow you to move back and forth between them.

To see all the slides on the same page, click here

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Key stats
Dividend yield 3.1%
Market capitalisation £118,217m
No. of shares out 2,620m
No. of shares floating 1,118m
No. of employees 154,848
Trading volume (10 day avg.) 1.5m
Turnover 44,074m EUR
Profit before tax 9,601m EUR
Earnings per share 3.02 EUR
Cashflow per share 3.72 EUR
Cash per share 1.17 EUR

Hargreaves: time for Unilever to push up profits

Emerging markets continue to drive growth at consumer goods giant Unilever (ULVR) and it now needs to push profit margins to 20%, says Hargreaves Lansdown.

A first quarter trading update from the group showed sales grew 3.1% overall, with 5% growth in emerging markets.

Analyst Laith Khalaf said Unilever’s global footprint helped ‘the consumer goods giant to capitalise on growth opportunities’ and in a typical day 2.5 billion people used a Unilever product.

The share price has also benefited from low interest rates that pushed investors into bond proxies like Unilever.

‘However, that trend has moderated, in part thanks to bond yields rising in the US, with Unilever’s stock market valuation falling back from the lofty heights it reached in 2017 to a more reasonable level,’ said Khalaf.

‘The trick now for Unilever is to push its profit margins up to 20% and it looks like it’s going to have to do that while it’s at the lower end of its 3-5% sales growth target.’  The shares rose 2.9% to £45.03 on Thursday.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Key stats
Dividend yield 1.2%
Market capitalisation £6,902m
No. of shares out 1,849m
No. of shares floating 1,820m
No. of employees 39,480
Trading volume (10 day avg.) 4.7m
Turnover £2,472m
Profit before tax £484m
Earnings per share -5.34p
Cashflow per share 5.97p
Cash per share 7.18p

Rentokil tapping into higher margins, says Peel Hunt

The shift towards higher growth pest control activities will lead to higher margins at Rentokil Initial (RTO), says Peel Hunt.

Analyst Christopher Bamberry retained his ‘hold’ recommendation and increased the target price from 345p to 381p after a first quartter trading update that showed organic revenue growth of 4% was ahead of last year’s numbers.

‘The shares trade on 26 times 2019 earnings per share… [and] a 103% premium to the FTSE All-Share. US peer Rollins trades on substantially higher multiples,’ he said.

‘Rentokil’s high margin, stable growth pest control activities are becoming a greater proportion of the portfolio, which should be further enhanced by mergers and acquisitions.’

The shares rose 1.9% to 374.9p on Thursday.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Key stats
Dividend yield 0.8%
Market capitalisation £822m
No. of shares out 26m
No. of shares floating 18m
No. of employees 2,200
Trading volume (10 day avg.) 0m
Turnover £186m
Profit before tax £31m
Earnings per share 37.78p
Cashflow per share 86.43p
Cash per share 48.22p

First Derivatives branching out, says Shore Capital

Financial consultancy group First Derivatives (FDP) is trading below historic averages as interest in the software grows outside of its standard markets, says Shore Capital.

Analyst Martin O’Sullivan retained his ‘buy’ recommendation on the stock after a ’short and sweet trading update’ that showed it was in line with market forecasts. The shares are up 54% year-to-date, which O’Sullivan said reflected investor confidence after a bump last October.

‘Whilst so, the prevailing multiples remain below historic averages: full-year 2020 enterprise value/earnings is 20.1 times versus a three-year average of 22.9 times. The recent peak was 34 times in January 2018,’ he said.

‘We retain a “buy” stance as the theme of faster and bigger is translating into more interest in software and new customer wins outside of the group’s traditional markets without margin dilution.’

The shares fell 5.4% to £30.85 on Thursday.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Key stats
Dividend yield 0%
Market capitalisation £3,227m
No. of shares out 387m
No. of shares floating 378m
No. of employees 1,512
Trading volume (10 day avg.) 0.6m
Turnover 630m USD
Profit before tax 166m USD
Earnings per share -0.06 USD
Cashflow per share 0.08 USD
Cash per share 0.58 USD

Numis downgrades BTG ahead of takeover completion

Numis has downgraded drug developer BTG (BTG) after its final results before the sale to Boston Scientific in completed in the middle of the year.

Analyst Paul Cuddon downgraded his recommendation from ‘add’ to ‘hold’ with a target price of 840p, which is the cash offer Boston Scientific made for BTG. He said the last trading update ‘reads well’ as pharmaceuticals delivered double-digit growth.

‘In light of the strong growth in interventional medicine and robust/resilient performance from pharmaceuticals, we continue to think that Boston Scientific has acquired a great business at a very attractive price, with highly cash generative pharmaceuticals business and the interventional medtech growth platform worth considerably more than 840p,’ he said.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Key stats
Dividend yield 4.2%
Market capitalisation £4,377m
No. of shares out 1,371m
No. of shares floating 972m
No. of employees 36,367
Trading volume (10 day avg.) 3.1m
Turnover 3,157m USD
Profit before tax 682m USD
Earnings per share 0.17 USD
Cashflow per share 0.37 USD
Cash per share 0.18 USD

Opportunities for Cineworld in 2019, says Jefferies

Positive news from the world’s largest cinema operator, US-listed AMC, bode well for Cineworld (CINE), says Jefferies.

Analyst James Wheatcroft retained his ‘buy’ recommendation and target price of 445p on the shares, which were trading at 319.6p on Thursday.

He said the AMC update highlighted ‘opportunity for 2019 to set new box office records in the US and globally’.

‘Cineworld has delivered episode one with the synergy upgrade - with potentially more to follow,’ he said.

‘The next two episodes focus on film admissions gathering momentum through 2019 after a slow start, followed by a re-rating to reflect a greater understanding of the future growth from refurbishments.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play How Kames Property Income got Brexit-ready

How Kames Property Income got Brexit-ready

Kames Property Income co-manager Richard Peacock says the fund is positioned to withstand the widely anticipated Brexit redemption stampeded.

Play Citywire 20: John Dodd's great Artemis expedition

Citywire 20: John Dodd's great Artemis expedition

Citywire executive chair Lawrence Lever sat down with Artemis founder partner John Dodd.

Play Citywire 20: Investec's du Toit on managing the 'jerk factor'

Citywire 20: Investec's du Toit on managing the 'jerk factor'

Investec boss Hendrik du Toit believes he has become far more decisive over the last 20 years, especially when it comes to managing 'jerk' factor.

Read More
Your Business: Cover Star Club

Profile: how Tiller believes it's cracked robo-profitability

Profile: how Tiller believes it's cracked robo-profitability

Ian Cadby and Jonathan Wauton of Tiller Investments believe they have developed the next generation of digital wealth platform.

Wealth Manager on Twitter