Mindful Money’s Monday share-tips: Persimmon, Carillion & Tullow Oil

30th June 2014


Persimmon shareholders will be closely looking out for any hints of a property market slowdown – given the recent action from the Bank of England – when the house-building giant delivers its half-year trading update on Wednesday.

While the York-based group reported a decent start to its financial year in its first quarter report, its latest set of numbers come in the wake of a very different backdrop given it follows the introduction of tighter mortgage regulation on the back of April’s Mortgage Market Review, which brought in tougher affordability checks for borrowers.

Sheridan Admans, investment research manager at The Share Centre, who rates the firm a ‘hold’, says: “The shares of house builders have recently been dented by the announcement of a possible rise in interest rates by the end of this year. Persimmon’s trading update however, is likely to show the momentum of the last few years continuing into the second quarter.”

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers adds: “An update with regards to the group’s ongoing return of surplus cash to shareholders could also be seen. For now, and with the share price up over 50% over the last 18 months, consensus analyst opinion currently points towards a ‘strong hold’.”

Wednesday also sees FSTE 250 support services group Carillion report its half year trading update. The group which operates in the industrial building, refurbishment and civil engineering sectors has enjoyed a 21% share price rise over the past year but is just 2% firmer over the last six months. However analysts at Liberium Capital and Oriel Securities have both reiterated upbeat recommendations on the stock this month.

Despite concerns over government spending and being cautious in the shorter term, Carillion have stated that it is well positioned for the longer term notes Admans, who has the stock on his ‘hold’ list. He says: “A recent update reported trading to be in line with expectations, so investors will not be expecting much excitement this time around. News on recent contract wins, its international operations and confirmation that it still expects revenue growth this year, will be the main areas of interest for investors to concentrate on.”

Bowman adds: “For now, with group restructuring largely complete and the company’s dividend yield of over 5% attractive in the current low interest rate environment, consensus analyst opinion currently denotes a buy.”

Tullow Oil delivers its own second quarter trading statement on Wednesday. The mid-sized oil and gas exploration and production company has endured a tough-time finding oil in recent years and over the past 12 months its stock has fallen 16%. However the firm’s recent news flow has been notably better and investors have responded in kind with the shares up 12% over the past three months and brokers at both JP Morgan Casenove and Westhosue Securities have reaffirmed positive recommendations on the business.

Admans, who is calling the shares a ‘buy’, says: “Investors will expect further updates on production targets for the year which were last time maintained at 79k-85k boepd. Investors will expect updates on the progress on existing projects and whether any of the current assets will be put up for sale.”

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