BEST OF THE BROKERS
ROYAL DUTCH SHELL
Credit Suisse downgrades the oil major from “outperform” to “neutral” and cuts its target price from 2,750p to 2,600p after a key part of the broker’s positive investment case – the long-awaited inflection point in free cash flow in 2012 – failed to materialise. Capex has been re-estimated to a higher figure of $32bn per year to drive growth, but Credit Suisse does not expect a pay-off from this for several years.
FRENCH CONNECTION
Following another profit warning last Friday, Merchant Securities rates the fashion retailer as a “hold” with a target price of 58p. The broker says a strong balance sheet with net cash of £33m is encouraging, and supports the current share price, but expects a downgrade of 2013 profits before tax, which currently stand at £6.7m. The brokers sees the stock as fairly priced at 6.3 times estimated 2013 earnings.
888 HOLDINGS
Panmure Gordon rates the online gaming group as a “buy” with a target price of 63p ahead of its fourth quarter statement due this morning. The broker expects 888 to report $88.5m in total operating profit for the quarter, driven largely by the company’s poker and casino operations. Despite a recent uplift in the share price on the extension of a US agreement with Dragonfish, the broker sees the stock as inexpensive.