Proactive Investors -
- FTSE 100 down 10 points at 7.494
- Ashtead (LON:AHT) warns of lower sales and profits than expected
- musicMagpie soars on bid approaches
Prime Minister Sunak says taxes can be cut over time
UK prime minister Rishi Sunak has declared he believes in cutting taxes “carefully and sustainably”, in a speech ahead of Wednesday’s Autumn Statement.
The PM said this was possible given the cooler inflation figures which last week showed a fall to 4.6%.
The Chancellor will DEFINITELY cut personal income taxes on Wednesday, income tax or national insurance. If he doesn’t the PM will look incredibly foolish for saying this morning, repeatedly, that the moment has come to start cutting taxes, because he knows most voters don’t see… pic.twitter.com/v4pzDInPs4— Robert Peston (@Peston) November 20, 2023
Sunak said the cuts to tax would be done “in a serious, responsible way, based on fiscal rules to deliver sound money, and alongside the independent forecasts of the Office of Budget Responsibility.”
“And we can’t do everything all at once. It will take discipline and we need to prioritise.”
“But over time, we can and we will cut taxes.”
Currys becoming investable again, says RBC
Another stock benefiting from some upbeat broker comment is Currys PLC (LON:CURY), with shares up 2.3% at 49.46p.
RBC Capital Markets has upgraded the stock to outperform from neutral and increased its price target to 70p from 60p.
It pointed out Currys' financial leverage and travails in the Nordic region have left it firmly in the investor "no-fly zone" in recent years.
But its proposed disposal of Kotsovolos in Greece will leave it with a net cash position.
Plus, it retains a strong relative market position in a sector ripe for consolidation, and its valuation looks very undemanding.
StanChart to outperform peers - Goldman
Standard Chartered PLC (LON:STAN) is set to show a rare out-performance relative to its bank peers over the next two years, according to Goldman Sachs (NYSE:NYSE:GS).
The US investment bank expects the bank to print a double-digit EPS compound annual growth rate (CAGR) and show around a 2.7 percentage point return on equity (ROE) improvement vs a low single-digit EPS CAGR and declining ROE at peer banks.
Goldman sees four drivers of this out-of-cycle EPS/ROE improvement.
It sees an unwind of loss-making hedges put-on by the group during late 2021, which are acting as a c.20 basis point drag on group net interest margins (NIM), starting in February 2024.
This benefit, as hedges are rolled over, would come as peers report flat-to-declining NIMs over the next two years on policy rate cuts.
Goldman also highlighted a brighter non-funds income outlook as continued share gains in its fund management are no longer suppressed by declining volatility.
It also suggested the new CFO could focus on the out-sized corporate office/HQ function relative to its peers, which has been the main source of historical ROA under-delivery vs peers.
Finally, capital now at top-end of the target range, with slow balance sheet growth ahead, could translate into continued buy-backs which would reduce share count at 6% p.a.
Upgrading to buy from neutral, Goldman pointed out the stock trades at close to record-low valuations compared to a near decade-high ROTE of 11% next year.
It has price target of 868p, down slightly from 879p, implying 38% potential upside on top of 3% dividend yield.
Shares are up 0.6% at 664p.
Foxtons jumps as shareholders push for sale - report
Shares in Foxtons (LON:FOXT) have jumped 7.2% to 43.40p after a report suggested shareholders are pushing for a sale of the business.
Milkwood Capital, an investment fund that specialises in investing in undervalued companies over the long term, owns about 4% and is the latest shareholder to demand a sale of the estate agency, according to The Times.
Rhys Summerton, who runs Milkwood Capital, said: “If you look back, in 2015 Foxtons was a £1 billion company. But the public markets are no longer valuing the good work the management has done recently and the only way to extract fair value is for the board to carry out a sale process.”
His statement follows pressure from the Canadian investor Converium Capital, which has been lobbying for Foxtons to carry out a strategic review over the past 18 months.
Converium Capital owns around 6% of the firm.
Capita boosted by £239 million contract win
Capita PLC (LON:CPI) is in demand with shares up 4.1% after it secured a new contract to manage the Civil Service Pension Scheme for the Cabinet Office.
The 10-year deal which kicks off from September 2025 is worth £239 million, the company said in a statement.
The outsourcer explained the CSPS is one of the largest public sector pension schemes in the UK.
Ashtead knocked by Hollywood strike and calm weather
Ashtead remains top of the FTSE 100 fallers – and by some margin – with shares down 12% after today’s profit warning.
Analysts at Liberum noted the warning is likely to mean Ebitda estimates for financial 2024 fall by around 2%, with pre-tax profit forecasts moving around 8% due to higher than expected depreciation and interest charges.
But it pointed out the two headline reasons for the revision - little emergency response work this year and the US writers' and actors' strikes lasting longer than expected - seem one-off in nature.
“We would look to buy on weakness as long term drivers are still intact (notably moves from owning to renting, mega-projects and industry consolidation),” it said.