Leading analyst Philip Gibbs at BZW is cautious about expecting too much of a premium to 724p, and there will be a delay before payment. The shares have already risen by nearly a third on takeover rumours since the beginning of the year, so there is a long way to fall, while there is little prospect of a third offer. Sell on strength.
LONRHO was a buy at 147p before last week's creditable half-year results of pounds 52m, according to analyst Alan Richards at BZW, and it is still a buy at Friday's close of 149.25p. He has revised his forecast for the current year upwards since the announcement to pounds 149m, putting the shares on a multiple of 17 times this year's earnings. That's more pricey than the market multiple of 13.2 times earnings. However, Mr Richards believes the shares are a good bet because in the post-Rowland regime, the African businesses are being run "more scientifically". That means performance targets and better information systems. The Princess and Metropole hotel chains are also performing more effectively than expected.
ASDA is a buy ahead of the results on Thursday, according to food retail analyst Mike Dennis at NatWest Markets. His forecast of pounds 235m for the year just ended is in the middle of the range of market predictions and puts the shares on a multiple of 15 times earnings on a small premium to the market. "Archie [Norman, the chief executive] has done what he set out to do," Mr Dennis says. Profits of pounds 235m would represent a 29 per cent increase on last year's normalised figure. There has been no progress as yet in resolving the ownership of the Burwood House property joint venture with British Aerospace. But the balance sheet is strong, and Asda's relatively large stores give it scope to grow sales in the areas such as clothing and video and music. Worth picking up at around 86p.
BARCLAYS is now a sell, says veteran bank expert Terry Smith at Collins Stewart. It's a maverick view, especially following the Wells Fargo Nikko fund management acquisition, which will make the bank the biggest institutional fund manager in the world. But expensive acquisitions suggest Barclays will never become a clone of Lloyds Bank. Those who remember British banks' adventures with Donald Trump, Crocker Bank and other great American disasters of the past 15 years, and fear Barclays is no different, should sell at Friday's close of 698p.
THIS is the last results week for the 27 privatised water and electricity companies, with Eastern, Midlands, Northern, Southern and London still to report. Stockbrokers Williams de Broe are buyers of all these shares. The theme of hefty dividend increases and the promise of more share buybacks to come has emerged strongly from the regional electricity company results already out. Despite caution over regulator Professor Stephen Littlechild's forthcoming review, analyst Philip Hollobone reckons that because of low gearing and high levels of dividend cover, the companies can deliver real dividend increases of 6-8 per cent per annum until the turn of the century. A forecast of pounds 150m for Northern, for example, makes it a buy at 794p.Reuse content