Mindful Money’s Monday share tips: ITV, Smiths Group, AMEC & Johnson Matthey

18th November 2013


ITV, Smiths Group, AMEC and Johnson Matthey all bring updates to the market this week – we look at what the brokers are recommending ahead of their reports writes Philip Scott.

ITV, formed after the merger of Carlton and Granada in 2004, is due to report its third quarter trading update on Tuesday.

Investors have been well rewarded as a result of management successfully restructuring the group. The past year alone has seen the media giant’s shares jump by no less than 100%.

Second half advertising revenues are expected to rebound says Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.

He adds: “Management previously forecast a 9% increase in National Advertising Revenue for the third quarter. The rebalancing of the business towards non-advertising is again likely to feature. Revenue expansion, driven by growth in Pay & Interactive and the success of such shows as Downton Abbey for its studios business is likely to be reported.”

Prior to the update analyst opinion currently points towards a strong ‘hold’ says Bowman but Sheridan Admans, investment research manager at The Share Centre, is calling the stock a ‘buy’. He says: “The move to more production from its studio business has continued and updates on recent acquisitions will be of interest. Other areas to concentrate on will be costs, margins and comments on the health of advertising rates.”

Engineer and medical devices firm Smiths Group delivers its third quarter trading update on Tuesday. Over the past 12 months its shares have risen by 38%, and by 10% in the last three.

The group is undertaking a rebalancing of its business where management is looking to move revenues away from government to commercial customers, along with raising exposure to faster growing emerging markets.

Bowman says: “The company may again highlight caution in relation to government spending constrained sectors such as defence and healthcare, although potential for the lifting of a proposed medical devices tax, due to political negotiations in Washington, could also be touched on.”

Ahead of the update, analyst opinion currently denotes a hold notes Bowman, a sentiment Admans concurs with. He says: “Investors will look for comments on any contract wins along with updates on the group’s debt levels and the pension deficit.

“Spending on defence in the UK and US is also under pressure, so investors will want to know the potential impact in the other relevant divisions.”

Also publishing an interim management statement on Tuesday is international project management and services company, AMEC, 8% stronger over the past three months.

Investors will be looking for news of further contract wins and how AMEC has built on its order book.

Admans says: “Management’s guidance on next year’s earnings will be of interest as some have questioned whether the company has much momentum left. Acquisitions will be a key part of the company’s growth strategy so investors will try and read between the lines for any signs of this. We currently list AMEC as a ‘buy’.”

On Thursday platinum and chemicals specialist Johnson Matthey, up 8% over three months, publishes its second quarter results.

In recent updates the group has been cautious about the short-term but keen to emphasise an improving outlook for the medium to longer term. Admans says: “The group’s range of products and customers has been improving. Investors will be concentrating on comments with regard to the catalyst market, along with any signs of improvement in Europe. We currently list Johnson Matthey as a ‘hold’.”

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