Most popular equity research this week | 30-3 Feb

Marginal increase to FY17E forecast

Joules Group Plc (JOUL) | finnCap, 31 January

"We estimate sales growth of 17.6% YoY for the 33 weeks of FY17E. With limited seasonality and a solid Spring/Summer 2017 wholesale order book, we upgrade our FY17E PBT and adj. EPS by 3% to £9.3m and 9.3p (+35% YoY). Additional investment will likely cap the FY dividend at 1.8p v our previous 2.8p forecast..."

Positive H1, delivery of organic growth during integration and confident outlook

Conviviality Plc (CVR) | Zeus Capital, 30 January

"CVR today issues a positive set of results for the H1 period to the end of October 2016. The company also reports strong trading during the Christmas period across all of its businesses, with Group sales +6.1% in November and December, including record sales at Matthew Clark, and a 2.1% increase in retail like for like sales. Overall, the business continues to perform in line with full year market expectations. Management remain confident in the outlook and the plan to deliver significant synergies following the transformational acquisitions..."

On the fast track with Hometrack

Zoopla Property Group Plc (ZPLA) | Panmure Gordon, 1 February

"The Zoopla story continues to develop apace, with the announcement of the £120m acquisition of Hometrack, a leading property data services company in the UK and Australia. The acquisition is not cheap at 14.7x EBITDA, but looks like a great fit strategically, with the price tag justified by a strong growth track record plus clear potential revenue synergies. Our initial view is that the deal should add c3% to EPS, further differentiates Zoopla’s investment case relative to Rightmove’s, and should be taken well by investors..."

Growth accelerates in UK and Europe as actions gain momentum

Carpetright (CPR) | N+1 Singer, 31 January

"CPR’s comprehensive transformation, which started 2 years ago, is now gaining traction. Whilst PBT fell £4m in H1 (after UK LFLs fell 2.9%), effects from key changes and results of targeted investment are encouraging. This led to an acceleration of refurbs being announced in Dec (120 now done), which is key to closing the door on erosive competitor openings. Whilst these refurbs are yet to fully feed through to results, LFLs were up 1.9% in Q3 vs tough comps, and £/€ driven price rises have been successfully adopted. This is a positive update. An avg. lease length of 6 years and c175 upcoming expiries provide vital flexibility to right-size..."

Q3 release: a good entry point?

Vodafone Group (VOD) | AlphaValue, 3 February

"An as expected and quite correct Q3 trading update for Vodafone excluding the revenue decline recorded in India (however, also expected but reflecting the heightened competitive pressure following the quite disturbing arrival of Jio in the Indian mobile market some months ago): Q3 revenues were up by 1.7% yoy organically and at constant change (vs +2.4% and 2.2% respectively in Q2 and Q1) to €13.69bn with slowing growth in AMAP (+3.9% vs +7.2 and +7.1% in Q2 and Q1), but correct growth in Europe (+0.7% as in the two previous quarters..."

Confident start to 2017

32Red (TTR) | Edison, 1 February

"32Red has announced a positive 2016 post-close trading update and strong current trading with a 21% increase in January revenues (to 30th). We expect 2016 EBITDA to have doubled to £10.5m (a marginal reduction on our previous forecast due to lower win margins), helped by the highly accretive Roxy acquisition. Our unchanged 2017/18 forecasts are for continued very strong profits growth as the business scales up, with more favourable supplier agreements and Italy now in profit. The 2017e EV/EBITDA of 6.8x looks much too low for a high growth..."

The Quest for Dividends

Sector Note | Hardman & Co, 1 February

"The Dow Jones Index has just breached the 20,000 mark, the first time in its 131- year history that it has done so, whilst the FTSE-100 Index has also been at record levels in recent weeks. The election of the controversial Donald Trump as the new US President, and more specifically the impact of his planned expansionist economic policies, have boosted stock markets, both in the US and in the UK..."

TalkTalk, Dividend Cut Fears Overdone... Buy

Talk Talk Telecom Group Plc (TALK) | Beaufort Securities, 2 February 

"TalkTalk (TALK.L) has reported Q3-17 trading in-line with market expectations, but importantly, the outlook for Q4 and beyond has improved. Further, retiring CEO Dido Harding took the unusual step of confirming that the H2-17 dividend payment of 10.58p per share will be paid. This is unquestionably positive and based on the H2-17 dividend alone, the stock is now yielding 6.4%. The dividend outlook for FY-18 was not discussed however, and..."

Positioned to capitalise on market growth

Bango (BGO) | Progressive Equity Research, 30 January

"In this note we initiate formal coverage on Bango. In our view the growth outlook for mobile payments remains favourable and Bango is well positioned to be a key beneficiary of market growth. The Group’s recent history of execution is strong, as is its financial position. Following seventeen years of investment, the Bango platform is state-of-the-art and sufficiently scalable to support the anticipated business expansion..."

Milking the benefits

Avon Rubber (AVON) | Edison, 3 February

"Avon Rubber’s trading statement (2 February) was reassuringly upbeat with Dairy benefiting from a stronger milk price and the Protection & Defence division continuing to see encouraging order intake. International orders for Protection & Defence are progressing, although final timing remains unpredictable. Cash generation was particularly strong, due to receiving a large customer receipt on the last day of the quarter, giving the group a net cash position of £11.1m..."