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Broker tips: Page Group, Sainsbury's, Carpetright
RBC Capital Markets upgraded PageGroup to 'outperform' from 'sector perform' and lifted its price target on the shares from from 490p to 640p, saying it "looks the best staffing play at this point".
It noted the stock has been out of favour but said it has the best geographic spread and has seen strong growth acceleration. In addition, it argued that headcount investment should pay off and that PageGroup should be the biggest beneficiary of any further improvement in the permanent market.
To take into account better fourth-quarter trading and a positive outlook, RBC lifted its mid-cycle discounted cash flow valuation to 640p.
"Page is a different beast from the glory days of 2006-7. Back then, it was more geared to financial services and accounting was much more exposed to the UK and benefited from all economies firing at the same time, strong wage inflation, and strong pricing.
"Since then, it has diversified geographically and by specialism and has developed the Page Personnel business. Hence, we are unlikely to see the peak margins of old, but on the positive side, the business should be far more robust through the cycle."
Sainsbury's and its large supermarket rivals are likely to deliver "zero growth" in 2018, warned Credit Suisse as it downgraded the orange-liveried grocer to a 'neutral' rating.
The Swiss bank, which cut its target price on Sainsbury's to 275p from 295p and moved it off its former 'outperform' rating.
"Despite the market pricing in hopes of a turnaround in 2018, we expect meagre share-price returns for the major grocers as our latest data do not support a materially better outlook, with food volume growth effectively zero," analysts said.
Analysts reduced like-for-like sales growth forecasts for Sainsbury's to 0.3% from 1.0% in the 2019 financial year and a fall of 0.3% is seen in 2020, revised down from growth 1.5% growth.
Deutsche Bank has taken an axe to its price target for Carpetright following the flooring specialist's profit warning on Friday.
The bank more than halved its price target on the hold-rated stock to 95p from 200p, saying the sharp downturn in recent trade sparks concerns about the consumer outlook.
"It is the macro environment which causes us to cut FY Apr-18 adjusted profit before tax from £13.8m to £4.5m (within the new guided range of £2m-£6m) and FY Apr-19 adjusted PBT from £16.9m to £0.6m.
"Capacity increase/withdrawal may well be affected by the shape of trading in the coming months, so the silver lining from a tougher macro could be market share gains for Carpetright."
The company warned on profits and said trading in its important post-Christmas period was "significantly behind expectations" as it slashed full-year profit guidance to £2m to £6m.