Shore Capital, Tullett Prebon, Haitong Research: Best of the Brokers for 19 November 2015
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Shore Capital has have retained a “buy” recommendation on Crest. They expect the short-term sell-off or profit-taking round in the sector looks to have run its course and stocks may rebound. Even at the sector peak towards the end of September, Crest never reached Shore’s fair value and was never overvalued in the same way as it peers, yet retreated by more than 15 per cent. Crest is targeting a rise in unit sales between 2014 and 2019 of 60 per cent and revenue growth of 120 per cent.
Tullett Prebon’s proposed purchase of Icap’s voice/hybrid broking business makes sense for both companies according to analysts at Shore Capital, although it does seem to look to be back-end loaded. They have reiterated a “hold” position. A disappointing trading statement issued on 6 November did, however, offset some of the deal’s benefits. Its fair value assessment fell from 410p to 375p.
Haitong Research has maintained a “buy” rating for BAE Systems with a fair value of 560p. With the UK defence review next week, they’ve update their multi-year programme-by-programme revenue forecast for BAE, which could be another positive catalyst to close the valuation gap between BAE and global peers. Analysts raised earnings per share by two per cent for 2015 and for 2016. BAE has suffered revenue erosion in recent years, with a 25 per cent decline from 2010 to 2014.