Best of the Brokers for 10 December 2015
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ROLLS-ROYCE
Analysts at Jefferies described the profit headwind of £100m to £150m in wide-body jet engines announced by the engineering giant as “a worrying development”. Around £50m to £80m of that related to the large engine aftermarket. However, they said the announcement did not materially impact the company’s medium-term story despite recognising that the mention of Trent engines. Target price was kept 700p and Jefferies maintained their “buy” recommendation.
DIXONS CARPHONE
Strength in the UK will keep the positive mood going at Dixons Carphone, according to analysts at Barclays. The electrical goods retailer continues to gain market share aggressively in mobile and electricals and produced another record Black Friday. The analysts are happy with their profit before tax estimate of £466m for the financial year and reiterated their “overweight” rating and target price of 530p.
PROVIDENT FINANCIAL
Analysts at Numis said Provident Financial was “a great business”, but said it is time to sell. “Provident has a great track record and we believe it is a high quality, highly profitable, low-risk lender,” they said. Yet the analysts believe the current margins are exceptional and unsustainable. They expect earnings-per-share growth to slow to zero by 2018. Numis cut its “hold” rating to “sell” and reduced its target price slightly to 2,641p from 2,664p.