Monday shares view – ASOS, Carillion and Whitbread

9th December 2013

This week sees brewer Whitbread, oil services support firm Carrillion and retailer ASOS report. John Lappin surveys broker opinion this week.

Brewer Whitbread reports its results this Tuesday, but the Share Centre’s investment research manager Sheridan Admans suggests that any mild let up in performance could result in profit taking.

The shares are currently around 3,500p have risen from 3,138p in the last three months and from 2,461p in the last 12 months.

“We continue to believe the longer-term fundamentals look sound as Whitbread looks on target to meet its five year growth plan.” The Share Centre lists the stock as a hold.

On Digital Look, 10 brokers rate the stock a strong buy, 1 a buy, 8 are neutral and 3 say it is a strong sell.

Oil Services firm Carillion reports on Wednesday. The sector has seen pressures on costs and margins. Shares have fallen from around 311p to 294p in the last three months. The shares were near 310p, 12 months ago.

“Updates on recent contract wins and on the contract pipeline, along with comments on its Canada and Middle East operations will also be worth noting. Having reported trading to be in line with expectations in October, it is the groups comments on the outlook for 2014 and beyond which will potentially be of most interest”, says Admans listing the stock as a hold.

Two brokers rate the share a strong buy, 7 are neutral, and one apiece are sell and strong sell on Digital Look.

Retailer ASOS is a stock which has proved many bearish analysts wrong in the last year.

In 12 months, the shares have risen from around 2,464p to 6,007p. The firm reports its first quarter results on Thursday, with investors keen to hear about how expansion in China and Russia is being received. It has also moved into Spanish and Italian markets which will be watched with interest considering the structural problems facing consumers in those regions.

“Its US operations currently only represent a small proportion of its geographical diversification. However, many UK businesses have failed to get the traction they have hoped for in the highly competitive US markets, so investors will be watching to see if ASOS can maintain a strong upward sales trajectory”, says Admans. The Share Centre lists ASOS as a hold.

Goldman Sachs has downgraded ASOS to a hold with a target price of 7,400p on Monday.

On Digital Look, 14 brokers rate the share as a buy or strong buy, 4 are neutral and 3 say it is a strong sell.

Elswhere, Marks & Spencer Group is dividing opinion. The stock was singled out by Credit Suisse in a report on the retail sector last week suggesting the firm would underperform last with a target price of 425p. But on Friday Citigroup reiterated its view of the stock a buy with a target of 575p. Shares are down a little in Monday trading to 466.90p.

Citi is closer to the majority view on Digital Look with ten brokers rating the shares a strong buy, and six a strong sell.

In other market news, reports that HSBC would seek a listing for its UK operations perhaps at £20bn have now been denied by the Bank on Bloomberg but with limited impact on HSBC shares which were up 0.08% to 659.8p.

Finally Canaccord Genuity has kept its ‘hold’ rating and 1,050p target price for Tullow Oil after the company’s disappointing well update today.

The company said that the Tultule-1 wildcat well onshore Ethiopia, located in the South Omo block, would be “plugged and abandoned as a dry hole”.

“This is a disappointing well result from the point of view that it hasn’t proved beyond doubt the commercial viability of the Omo basin; however, this is only the second well of the programme in this basin,” said Canaccord in its research report.

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