Mindful Money’s Monday share tips: Icap, Tate & Lyle, Aberdeen Asset Management & Booker

31st March 2014


Despite a difficult trading environment for Icap’s investment and commercial banking customers, analysts are expecting to hear some positive progress when the firm reports its full year trading update on Tuesday writes Philip Scott.

The global wholesale broker has enjoyed a 30% share price rise in the past year and trading on its BrokerTec fixed income platform coupled with group cost cutting are likely to have contributed.

But Hargreaves Lansdown Stockbrokers, equity analyst, Keith Bowman forecasts that management outlook comments are likely to remain cautious in tone. He says: “Ahead of the announcement and with proprietary trading at the group’s banking customers still under intense regulatory attention, analyst opinion currently points towards a ‘weak hold’.”

Sheridan Admans, investment research manager at The Share Centre, who rates the stock a ‘hold’ points out that revenue growth has been under pressure as banks cut back on trading activities and in addition there have been new regulations to contend with.

He adds: “Investors should expect the CEO to remain cautious for the near term as concerns over the Ukraine, China and emerging markets remain.”

Also on Tuesday, emerging markets specialist fund manager Aberdeen Asset Management publishes its latest trading update.

The share price has been under pressure so far this year, down 8% over 12 months and by 19% in the past three, as concerns grow for emerging markets. However the consensus is pointing towards a ‘buy’ recommendation with analysts at JP Morgan Casenove having just reiterated an ‘overweight’ call on the stock.

For his part, Admans rates the shares a ‘hold’. He says: “In its last update there was a fall in funds under management and investors will be hoping that this trend has not accelerated. Another area for investors to focus on will be the group’s outlook for its main markets.”

Thursday sees Tate & Lyle reports its full year trading update. The group’s third quarter update back in mid-February saw it announcing an effective profit warning and over the past year its shares are now off by 21%.

A significant overhang of unsold Chinese sucralose, the core ingredient of its Splenda sweetener, had impacted notes Bowman. He adds:  “The update will see management outlook comments scrutinised particularly closely. Consensus pre-tax profit for the current full year is now forecast to remain flat at around £325m.”

Prior to the announcement overall analyst opinion has cooled from a ‘strong buy’, to a ‘strong hold’. However brokers at Deutsche and Societe Generale remain upbeat and have just reaffirmed their ‘buy’ recommendations.

On the same day cash and carry operator Booker, which has enjoyed a 37% share price hike over the past year, delivers its fourth quarter results.

Investors will be keen to receive a progress update on its UK operation of Makro and how its bottom line is benefitting from the integration says Admans, who is calling the stock a ‘buy’. He adds: “In addition it will be worth noting if Booker has benefitted from recent rising wages and inflation and food inflation falling. Investors will also be interested to hear how Booker’s tentative expansion into the Indian market is progressing.”

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