Best of the Brokers for 18 November 2015
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STANDARD CHARTERED
Jefferies believes the $17bn revenues implied in Standard Chartered’s 2018 returns on an equity target of eight per cent will be “tough to achieve”, given the ongoing pressure at the bank. Five per cent returns would be more achievable in 2018 the broker says. Jefferies has slashed earnings estimates for 2015-17 by 60 per cent and dropped its target price to 400p from 602p at an “underperform” rating.
ASOS
Online fashion retailer Asos has been named as Barclays’ top pick, with an “overweight” rating and target price of 4,500p on the back of “positive feedback from last week’s fashion preview for spring/summer 2016, strong current trading and a solid outlook” for 2016. The broker says there is a clear plan for the year ahead to build on good guidance of around 20 per cent sales growth, and leave behind the past few challenging years.
RESTAURANT GROUP
Restaurant Group, which owns Frankie & Benny’s, has had its rating downgraded from “buy” to “hold” at Canaccord Genuity, with a target price of 700p down from 760p. The broker says the Uefa football championships and Olympics will be a distraction next year. The living wage kicking in will put pressure on operating margins, which will hit the group hard as “we do not think [it] has any pricing power, especially outside London”.