Mindful Money’s Monday share tips: BP, Glaxo, ICAP & Compass Group

3rd February 2014


As the oil majors continue to feel the heat investors will be all-ears when BP publishes its fourth quarter results on Tuesday writes Philip Scott.

The industry has been under pressure of late as some groups continue to suffer from weaker demand in refined products with oil prices having moderately pulled back.

BP has been no exception as in the past year its shares have moved just 2% up and drop by 1% over the last three months. However the despite the market’s woes, the current broker consensus has the shares edging towards a ‘buy’.

The Share Centre’s investment research manager Sheridan Admans says: “Investors may expect to see the same in BP’s results. They will also hope for updates on the lingering issues post the Gulf of Mexico disaster and estimates for further compensation pay outs. We currently list BP as a ‘buy’.”

Wednesday sees GlaxoSmithKline deliver its fourth quarter/full year results.

Given previously announced Chinese bribery and corruption allegations, group trading in China is likely to remain firmly in the spotlight – notably third quarter sales there fell by 61%.

In addition, while the firm’s shares have firmed by 8% over the past year, the last three months has seen the stock endure a 5% fall.

Keith Bowman equity analyst at Hargreaves Lansdown Stockbrokers says: “Against a backdrop of falling currencies, wider emerging market sales may also receive attention. Nonetheless, management’s ongoing focus on costs is likely to provide a positive. Furthermore, both the group’s pipeline of potential new drugs and management’s continued emphasis on shareholder returns may once more be underlined. Ahead of the results, analyst consensus opinion points towards a strong ‘hold’.”

For his part Admans has the shares listed as a ‘buy’. He says: “Marketing has begun on certain drugs that were approved last year and an update report here would be welcome. The company has sold certain assets recently and so investors will be wondering if there is potential for acquisitions. Investors will also want to receive a progress report on the cost cutting program.”

Wednesday also sees ICAP publish its interim management statement. The last update from the global wholesale broking business was relatively positive and investors will be hoping for more of the same. The past year has seen its shares rise by 18%.

The consensus on the stock is a ‘hold’, a sentiment Admans concurs with. He says: “Investors should expect further news on reducing overheads and other cost cutting measures. The performance of new products and markets, activity levels and any comments on regulatory issues will also be worth noting.”

Contract catering giant Compass Group reports its first quarter trading update on Thursday. Bowman says: “With difficulties in emerging markets proving an early theme for 2014, the group’s Fast Growing & Emerging business is likely to prove a point of interest. For the full year 2013, the division generated 19.2% of group revenue, up from 18.6% in 2012.”

Ahead of the update analysts at both Panmure Gordon and Numis Securities have reiterated respective ‘hold’ recommendations on the business, which has enjoyed a share price increase of 19% over the past 12 months.

Admans also has the stock presently listed as ‘hold’, he says: “Investors will be keen to hear if there has been any improvement in trading in its European and Japanese operations, where it has been implementing aggressive restructuring. Evidence that strong growth from its US and emerging markets operations is continuing to support the slowdown in those regions will be of interest for investors.”

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