Mindful Money’s Monday share tips: Prudential, Imperial Tobacco and Eurasian

11th August 2013

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Results this week arrive from insurer Prudential, Imperial Tobacco as well as mining giants Glencore Xstrata and Eurasian Natural Resources – we look at what the broker consensus is on their shares. Philip Scott reports.

Prudential updates the market today with its second quarter results and investors will be keen to see if the group can maintain operating profit momentum, led by its US and Asian operations growth. Over the past 12 months, its shares have enjoyed a leap of 47 per cent.

However the past three months have been fairly flat, moving up just 1 per cent. The overall broker view on share data website Digital Look, has the stock listed as a ‘buy’, as does retail stockbroker The Share Centre.

Sheridan Admans, investment research manager at the firm says: “Given the run up in developed equity markets over the last 12 months and investor sentiment, shareholders will be looking to see if M&G, Prudential wealth management operation can deliver its 17th successive quarter of inflow as European operations continue to expand.”

Imperial Tobacco delivers its own update on Tuesday, and investors will be waiting to find out whether the group has improved falling volume rates, and whether its pricing strategy continues to support European margins. Over the past 12 months, its shares are down by 15 per cent and by 7 per cent over the past three months alone.

But both Digital Look and The Share Centre rate the stock as a ‘buy’. Admans says: “Investors should look for continued market share growth in key markets and rising demand for its luxury products, such as Cuban cigars and Snus.”

Also reporting also reporting today include Resolution, deemed a ‘hold’ and, oil and gas development and production EnQuest, rated a ‘buy’ by Admans.

Wednesday sees second quarter updates from mining groups Glencore Xstrata and Eurasian Natural Resources. Miners have endured a rough period as China’s economy, the second largest in the world, has slowed down from its previous pace. As China is a major importer of commodities, this has seen share prices pull, in some cases dramatically back, as demand for resources has slackened.

The broker consensus on Digital Look has Glencore Xstrata, deemed a ‘buy’ as does Admans. The group’s share price has fallen by 14 per cent in the past year and by 23 per cent in the past six months. Investors should look for the latest production numbers from Glencore’s various divisions.

Admans notes: “The on-going impact of lower commodity prices on revenues and earnings will also be of note. An update on the Xstrata merger will be welcome as investors will want to know whether the initial cost synergy predictions are still expected.”

Eurasian Natural Resources’ share price has endured an even harsher time, collapsing by 46 per cent in the past 12 months and by 21 per cent in just the past three.

All key commodities have had positive production numbers in both Kazakhstan and African operations but the issue of weak commodity prices and its impact on revenue is what investors will want to know, says Admans, who rates the stock a ‘sell’, while Digital Look points to a ‘neutral’ position. Admans adds: “An update on corporate governance issues and the potential takeover should also be of note to investors.”

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