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Key stats
Market capitalisation £5,814m
No. of shares out £692m
No. of shares floating £445m
No. of employees 12,799
Trading volume (10 day avg.) 2.1m
Turnover £1,464m
Profit before tax £85m
Earnings per share 0.16p
Cashflow per share 11.53p
Cash per share 24.54p

Market undervaluing Ocado, says Numis

Ocado (OCDO) has advanced its deal to provide platform technology to US supermarket giant Kroger but Numis says there is not enough value being placed on the tie-up.

Analyst Andrew Wade retained his ‘buy’ recommendation and target price of £12.50 on the stock, after Ocado and Kroger signed a contract, with a ‘few surprises’ as more customer fulfilment centres (CFCs) are being rolled out than first thought.

‘We see the initial 20 CFC commitment as a staging post rather than an end game, and see scope for a significant multi-year CFC roll-out thereafter,’ he said.

‘Indeed, since the initial excitement of the Kroger deal, the shares have fallen back markedly and we are not convinced that sufficient value is being ascribed to the embedded long-term value in the deals Ocado has already signed, let alone those still to come.’

The shares rose 5.2% to 842.4p yesterday.

Key stats
Market capitalisation £110,018m
No. of shares out £20,058m
No. of shares floating £19,913m
No. of employees 74,000
Trading volume (10 day avg.) 30.7m
Turnover 187,209m USD
Profit before tax 21,026m USD
Earnings per share 0.17 USD
Cashflow per share 0.78 USD
Cash per share 1.01 USD
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BP back on its game, says Interactive Investor

BP (BP) has outpaced expectations, with its third quarter update showing a company ‘back on its game’, according to Interactive Investor.

Analyst Richard Hunter said BP justified is market consensus rating as a ‘strong buy’ after a 124% rise in third quarter profits left the company cash rich with ‘several positive ramifications’.

‘The company now expects to pay for the BHP Billiton [shale assets] acquisition entirely in cash and without the need for equity, the monies which had been earmarked for the purchase will now be used to pay down net debt and even then there is an ample surplus to increase the dividend and keep the share buyback programme on track,’ he said.

‘These numbers reflect a business which is back on its game and the initial share price reaction is understandably positive,’ said Hunter.

The shares rose 2.3% to 547.4p yesterday.

Key stats
Market capitalisation £7,444m
No. of shares out £140m
No. of shares floating £133m
No. of employees 28,318
Trading volume (10 day avg.) 0.4m
Turnover £4,056m
Profit before tax £886m
Earnings per share 415.59p
Cashflow per share 501.97p
Cash per share 36.93p

Next is fairly valued despite tough markets, says Shore Capital

The clothing market has been tough due to unseasonably warm weather but Shore Capital says Next (NXT) shares are fairly valued and supported by its dividend yield.

Analyst Greg Lawless reiterated his ‘hold’ recommendation on the stock ahead of its third quarter update. He said he was looking for the impact of unseasonably warm weather in September and October that will not have helped figures, which are already up against tough comparatives.

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‘The company remains well-managed with tight cost and stock control,’ he said. ‘For now, we believe that the shares remain fairly valued supported by a dividend yield of 3% and strong cashflow generation reflected in the free cashflow yield of 12%.’

Key stats
Market capitalisation £44,582m
No. of shares out £707m
No. of shares floating £681m
No. of employees 40,400
Trading volume (10 day avg.) 1.2m
Turnover £11,512m
Profit before tax £3,350m
Earnings per share 274.92p
Cashflow per share 314.99p
Cash per share 300.51p

Hargreaves: Reckitt Benckiser suffering from self-inflicted problems

Consumer giant Reckitt Benckiser (RB) has suffered a number of self-inflicted setbacks recently but Hargreaves Lansdown says it should be able to recover.

Third quarter sales slipped back 2% from their 2017 level after currency issues and a problem in their European manufacturing facilities.

A problem at its baby milk plant lost it £70 million in sales and comes after a Korean sanitiser tragedy and a cyber attack.

Steve Clayton, manager of the HL Select funds that have positions in Reckitt, said the latest issue was ‘clearly of Reckitt’s own making and the company will need to convince investors that they have fixed this and that there is nothing else on the horizon’.

He added that most of its ‘difficulties in the third quarter look self-inflicted’ but customer demand is ‘solid enough’.

‘The rest of the group looks to be performing to plan and the long-term attractions of the stock are strong,’ said Clayton.

The shares fell 4.6% to £63.10 yesterday.

Key stats
Market capitalisation £2,009m
No. of shares out £109m
No. of shares floating £108m
No. of employees 13,773
Trading volume (10 day avg.) 0.4m
Turnover £1,262m
Profit before tax £186m
Earnings per share 98.18p
Cashflow per share 137.27p
Cash per share 41.14p
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WH Smith deal impresses Peel Hunt

Peel Hunt is impressed by WH Smith’s (SMWH) move into the US with the acquisition of InMotion.

Analyst Jonathan Pritchard retained his ‘hold’ recommendation and target price of £19.50 on the stock after it bought InMotion for £155 million.

‘We are very keen on the deal. While not cheap, it is a very good business in its own right and crucially opens a lot of doors.’

He said the newsagent now had a ‘platform from which to launch its travel format into North America’ and ‘we also expect that the InMotion format will be rolled out to the rest of the world’.

‘A very good day for WH Smith,’ added Pritchard, maintaining his ‘hold’ rating and £19.50 target price on the shares, which rose 6% to £18.38 yesterday.



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