Best of the Brokers for 02 November 2015
To appear in Best of the Brokers, email your research to notes@cityam.com
Canaccord Genuity has downgraded Cineworld from “hold” to “sell” with a target price of 535p, from 620p, warning of the “spectre of disappointment” despite this year’s spate of blockbusters. The broker warned that Cineworld tends to underperform rivals Vue, which is “more aggressive” on pricing, and Odeon, which is better at screen allocation, and expects no different this quarter. Next year things will be even tougher, with few big releases and the Olympics to distract audiences.
Numis maintained its “sell” rating for Moneysupermarket.com after the money comparison website released its third quarter trading update on Friday, with revenues nine per cent higher than expected. The broker upped the target price accordingly, from 207p to 225p, but still thinks the company is over-valued, and vulnerable to future competitors, like Google, which could disrupt the industry.
Standard & Poor’s maintained its “hold” rating but lowered its target price for RBS from 370p to 340p, citing “the high uncertainity from the various fines, run-off of bad book and the closure of the investment bank” and uncertainty over the extent of litigation and restructuring expenses, versus the “strong profitability” of the core personal and business banking business. Lower fee incomes and interest margins mean the broker has also lowered its earnings per share forecast by 10 per cent.