Early November Trading Updates: Broker and Tipster Sentiment

In this week’s article, we review five key trading updates made in November so far, and analyse how brokers and tipsters have interpreted the most recent figures.

Associated British Foods (ABF), Trading Update on 6th November

Since update: Share price +7.4%, 6 Tips (100.0% Buy)

Despite falling profits in the firm’s sugar operations, the firm cited its clothing outlet Primark – which accounts for approximately 60% of ABF’s profits – as a source for future growth. The announcements were received well by tipsters and brokers alike.  HSBC, UBS, Kepler Chevreux and Liberum Capital all maintained buy ratings on ABF, while tipster GA Chester (Motley Fool) sees shares as a potential lifetime investment; noting the major shareholders’ business stewardship, a robust balance sheet and high profit margins.

BT Group (BT.A), 1^st November

Since update: Share price +3.6%, 6 Tips (50.0% Buy, 33.3% Hold, 16.7% Avoid)

With three years of falling EPS and further falls expected, Robert Stephens (Investomania) notes that “the prospects for the telecoms company continue to be downbeat at first glance”. However, brokers and tipsters see opportunity as the company faces up to its issues and repositions itself accordingly. Brokers Numis and HSBC consider the shares to be worthy of a buy rating, while Deutsche Bank reiterated a hold recommendation. Tipster Kevin Godbold also sees upside potential, but fellow Motley Fool author Edward Sheldon wasn’t convinced, put off by a 5% reduction in the firm’s interim dividend and finding that “closer analysis of the numbers reveals some pretty ugly figures”.  

First Derivatives (FDP), 6^th November

Since update: Share price +0.6%, 4 Tips (50.0% Buy, 25.0% Avoid, 25.0% Sell)

Tuesday’s RNS – which announced a substantial rise in profits and an increased interim dividend – was met with contrasting responses from brokers and tipsters. Brokers Liberum Capital and Shore Capital reiterated buy ratings, but the financials did little to convince Tom Winnifrith (ShareProphets), who warns that “one day this pack of cards will collapse”. GA Chester (The Motley Fool) takes issue with the software provider’s valuation and prospective dividend yield. After an initial spike, shares currently lie marginally above their pre-announcement levels.

Just Eat (JE.), 1^st November

Since update: Share price +3.5%, 6 Tips (66.6% Buy, 16.7% Hold, 16.7% Sell)

Last Thursday’s Q3 results boasted “strong performance”, with YTD revenue growth of +44%. However, increasing investment both in the UK and overseas has – according to Rupert Hargraves – hurt investor sentiment. That being said, the Motley Fool tipster believes recent weakness could signal an “excellent opportunity for long term investors”. Brokers Canaccord Genuity, UBS and Liberum agree, while Deutsche Bank reiterated a hold rating and Peel Hunt offer the only sell recommendation, switching from a ‘buy’ rating earlier in October.

Purplebricks Group (PURP), 6^th November

Since update: Share price -1.3%, 3 Tips (33.3% Buy, 66.7% Sell)

Holders of shares in Purplebricks have endured a torrid 2018, with shares sliding over 55% during the course of the year. The online real estate agent posted revenue growth during the first half of the year, but admitted that the current UK market was “challenging”. Broker Peel Hunt subsequently reiterated its buy rating, but tipsters Tom Winnifrith (ShareProphets) and GA Chester (The Motley Fool) were once again in agreement, warning tipsters to give shares in the company a wide berth, with the most recent announcement raising “more questions than answers”.

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Disclaimer: The contents of this article should not be considered financial advice. All information displayed as at 7th November 2018.