Burberry, Berkeley Group, Entertainment One: Best of the Brokers for 8 December 2015

To appear in Best of the Brokers, email your research to notes@cityam.com

 

According to analysts from Shore Capital, business is looking rosy for property developer Berkeley Group, with trading for its first half of the financial year roughly in line with expectations and the underlying profit before tax of £242m, marginally beating estimates. However, despite the positive signs for the company’s income, the brokers maintained a “hold” recommendation.

 

Burberry has not worn the slowdown in Asia Pacific and the Americas well, as much of its earnings are dependent on the affected regions. In its initial note about the luxury retailer, Liberum has concluded that poor trading and dismal margin growth could cause the share price to plummet even further, and has given the company a “sell” rating with a target price of 1,050p. They warn there is little evidence of margin accretion in the investment case, and that cash returns provide adequate support.

 

After Entertainment One set the pricing of senior secured notes last week, analysts at Canaccord Genuity have decided to maintain their “buy” rating, but have slashed the target share price by 12 per cent, from 323p to 284p. Canaccord Genuity remarked that the company had refinanced its debt at a higher cost than it has expected, which lead to downgraded target price.