Check out this week's top equity research
Companies: BLTG, TUNE, FUL, IMG, NG/, PPH, PURP, MRW
Featured Report: A Shore Thing
We initiate with a 25p price target and a Buy recommendation. Fulham Shore is a highly investable opportunity with a strong pipeline of new openings, a differentiated product-led offering with an attractive pricing strategy, proven financial dynamics, a highly experienced management team and a number of incremental profit levers... read more
Morrisons performed well, again
WM Morrison Supermarkets (MRW) | AlphaValue, 05 May
"In the 13 weeks to 30 April, group lfl sales excluding fuel, were up by 3.4%, comprising contributions from Retail of 3.0% and Wholesale of 0.4%. Group LFL including fuel was up 6.3%. Total sales excluding fuel were up 2.8% after the impact of last year’s store closures. Including fuel, the growth came in at 5.8%..."
Apple dispute continues, MIPS/Ensigma up for sale
Imagination Technologies (IMG) | N+1 Singer, 04 May
"Imagination has confirmed that while discussions with Apple remain ongoing, it has been unable to make satisfactory progress to date regarding alternative commercial arrangements. The group has therefore commenced the dispute resolution procedure under the licence agreement. Imagination has also completed a business review and decided to dispose of the MIPS and Ensigma businesses in order to concentrate resources on PowerVR. We expect the sales of these assets to broadly cover the group’s current net debt position. With an acceptable resolution with Apple far from certain Imagination remains in a very difficult position and we retain our Sell recommendation..."
H1’s +ve surprise demonstrates TUNE’s continued strong progress
Focusrite (TUNE) | Panmure Gordon, 03 May
"As anticipated in our March 20th note, TUNE has exceeded our H1FY17 estimates, resulting in upgrades of c.4% to our FY17 and FY18 adj. PBT forecasts which remain conservatively-framed, in our view. The +15.7% increase in the H1FY17 dividend is also a positive surprise, well ahead of our forecasted +8%. Evidence abounds in the H1FY17 results supporting our confidence in management’s strategy of moving into new segments served and expanding its Focusrite (c.65% of total TUNE sales) and Novation (c.30% of total TUNE sales) brand family ranges with innovative/disruptive products. Examples include; (1) within the Focusrite family, notable sales growth of the second-generation Scarlett interface range (TUNE’s largest product offering by sales) and RedNet products to penetrate the B2B markets; (2) within the Novation family, further very strong sales growth of Launchpad aimed at younger consumers; (3) growing strength of the Far East where TUNE has a strategic geographical focus; and (4) six new products launched in H1FY17. Noting the highly encouraging outlook commentary, our conviction continues to build that TUNE has the ability to remain at the forefront of technology developments in its product markets and therefore has multiple drivers to achieve sustainable profit and dividend growth. We raise our TP to 265p (223p), and retain our BUY..."
Year end trading update
Purplebricks (PURP) | Zeus Capital, 04 May
"Purplebricks’ financial year end is 30 April. Today’s trading update reveals: UK instructions in 6 months to 30 April 2017 were up 83% YoY; Local Property Experts (LPE) rose 140% YoY to 493 (April 2016: 205) with 77 in Australia and 416 in the UK (company target set in January 2016 was 360); Progress in Australia is “very encouraging” with recent launches in Perth and Adelaide and “average revenue per listing exceeding A$5,000”; The number of Trustpilot reviews rose to 17,100 (April 2016: 5,000) “with the average score edging up from 9.4 to 9.5 out of 10”. Management outlook is positive with “the Company on course to meet the board’s full year expectations”..."
Growth, stability, returns
National Grid (NG/) | Edison, 04 May
"National Grid’s high visibility revenues, underwritten by regulatory returns across the UK and US, offer equity holders an attractive combination of asset growth and a 4.3% dividend yield. Both the UK and US businesses are well run. The UK business has predictability of revenues until the end of the current regulatory period in 2021 and is delivering returns ahead of OFGEM’s expected ‘base returns’. In the US, a rate filing programme is underway, which will result in enhanced returns in the years ahead. Now that the sale of the UK Gas Distribution is complete, management can continue to focus on delivering shareholder returns across its business units. Management targets 5-7% asset growth, and our fair value per share of 1,120p offers 11.2% upside versus current prices..."
Strong delivery with further potential
Focusrite (TUNE) | Edison, 03 May
"A number of factors have combined to produce excellent interim results for Focusrite: strong demand for its leading products, exposure to the buoyant US market, a promising result from sales to Amazon, good margin control, and a significant increase in cash generation. We are upgrading our forecasts, cautiously in view of consumer markets, although opportunities in the Far East and online represent potential upside..."
“Very well supported” £9.8m placing
Blancco Technology (BLTG) | Equity Development, 04 May
"Following the 25th April trading statement, Blancco announced this morning that it had raised £9.8m (gross) in fresh equity, after placing 5.8m new shares at 169p each. We understand this top-up funding was very well received by existing investors, who were keen to support the board’s ambitious, yet realistic, expansion plans..."
Positive 2016 Q1 Trading Statement
PPHE Hotel Group (PPH) | Hardman & Co, 03 May
"PPHE’s Q1 trading statement indicates a much stronger than anticipated performance, with LFL revenues up 17%, in spite of Easter falling in Q2 2017 (Q1 2016). Partly, this reflects a depressed comparative, with Q1 2016 revenues flat in the aftermath of the traffic terrorist incidents in Brussels and Paris. We have left our 2017 forecasts unchanged but feel there is likely to be an upgrade of 3% or so in revenues when we reach the interim results. The shares trade at a significant discount to NAV as adjusted for the real value of the assets, and at a significant discount to peers on earnings-based measures, which is unwarranted..."
