Mindful Money’s Monday share-tips

29th July 2013

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Companies updating the market this week include broadcaster ITV, Centrica and the state-backed Lloyds Banking Group. Philip Scott looks at what brokers are saying about the FTSE 100 giants.

Tuesday sees ITV deliver its half year results. Over the past year its share price has surged by 107 per cent, and by 35 per cent in the past six months alone. Share data hub Digital Look, says broker consensus is edging towards a ‘buy’. As flagged by management at its first quarter update, tough comparisons with last year’s European football championships are expected to drag on advertising performance.

Nonetheless with the BBC covering Olympics providing the second half comparative, a rebound is forecast, with a broadly flat full year performance currently predicted says Keith Bowman, equities analyst at Hargreaves Lansdown Stockbrokers.

He adds: “Further reference to the group’s ongoing strengthening of its Studios business via bolt-on acquisitions may be made, while analysts currently estimate a 12 per cent increase in half year pre-tax profit to £264m. Prior to the announcement and with the share price more than doubling in the last year, analyst opinion currently denotes a strong ‘hold’.

Refinery group BP delivers its second quarter results on Tuesday.  The troubled group is gradually recovering from the disaster in 2010, but there are still lingering issues about the size and number of claims for compensation. BP’s shares are up 4 per cent over the past three months and by 9 per cent over a year.

Sheridan Admans, investment research manager at retail stockbroker, The Share Centre, says: “Investors would like to hear of the potential impact should claims get out of hand and what BP is doing to combat them.

“Other than this, we would expect revenue may have taken a small hit since average oil prices in second quarter have been slightly lower than the first. However, improved production numbers may negate this. Investors will also be looking out for exploration and drilling updates.” Admans lists BP as a ‘buy’ while the consensus on Digital Look points to a ‘neutral’ position.

Also on Admans ‘buy’ list is British Gas owner Centrica. Over the past 12 months its shares are 21 per cent better. Unveiling its interims this week, the group’s move into shale gas exploration in the UK attracted many headlines, but that is something for the future. Admans says: “Current investors will be focusing more on its existing gas business, both here and in North America. In May, Centrica reported trading to be in line with expectations and the market will be expecting more of the same.”

The 39 per cent taxpayer owned Lloyds Banking Group, has enjoyed a strong share price rally, albeit from a low base. The bank which unveils its second quarter results on Thursday has witnessed its stock rise 135 per cent since this time last year and in the past three months, it has surged by 29 per cent. The Share Centre has the bank as a ‘hold’ and Digital Look is ‘neutral’. Admans says: “There has been a growing confidence over the group’s recovery plans, allied to improvement in the UK housing market, and institutional interest in the Government’s stake. As a result the market will be concentrating primarily on the recent positives such as lower costs, bad debts and asset sales.”

International Consolidated Airlines, formed by the merger of British Airways and Iberia in January 2011, reports its half year results on Friday. While management highlighted “unchanged” underlying market conditions as of its June traffic report, the mixed performances of its US focused British Airways and Spanish Iberian business are again likely to provide stark contrast. Its shares are up 30 per cent over six months and by 94 per cent over the past year. Broker consensus on Digital Look has it as a ‘buy’.

Bowmans says: “More broadly, and within the context of ongoing wider management cost saving initiatives, the recent delivery of new more efficient aircraft may be highlighted, although non-fuel related costs may have again risen, with new British Airways staff required to man the new aircraft continuing to be recruited. In all and given both ongoing exposure to a recovering US economy and restructuring at Iberia, analyst opinion currently points towards a ‘buy’.”

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