The all-share merger last August of Dixons (owner of Currys and PC World) and Carphone Warehouse was well received by the market. The shares have risen steadily from 320p to around 450p today.
City analysts remain keen on the stock after the company released forecast-beating maiden interim numbers before Christmas. The Board also said that integration is progressing well, and that 80m+ of synergies are now expected by 2016-17, one year ahead of plan.
Analysts at Barclays and Investec were among a number of City company-watchers to reiterate positive ratings. Barclays has Dixons Carphone trading broadly in line with the UK General Retail sector on a 2015 calendar-year price-to-earnings (P/E) ratio of 15, but said we see significant upside risk to our earnings forecasts. Meanwhile, Investec noted the companys current modest dividend yield of around 2%, but highlighted free cash flow increases in FY16, potentially offering scope for further shareholder returns.
Cruise operator Carnival has seen a number of analyst upgrades, both before and after releasing forecast-beating fourth-quarter results on 19 December.
At a share price of 2,932p, Carnival trades on an ostensibly pricey forward P/E of around 20, but Credit Suisse analysts said: We continue to see [Carnival] shares as attractively valued particularly versus longer-term earnings power in a normalized environment.
Analysts at Berenberg, which this week lifted their price target on Carnival from 3,000p to 3,500p, continue to believe there is a new-found determination on the part of the cruise operators to improve returns on capital, which is and remains pivotal in our positive stance on the sector. The Berenberg analysts also point to a number of other factors, including the continued recovery in the US economy and lower fuel prices, which leave us optimistic on the outlook for 2015.
Over two-thirds of analysts have been Barclays bulls for 18 months or more, and the company remains the City experts best-loved bank going into 2015. Indeed, sentiment has further strengthened, according to financial data website Digital Look, which has 19 of a pool of 25 analysts currently rating Barclays a buy with no sells.
Analysts at JP Morgan Cazenove said last month that the results of the Bank of England stress tests reinforced its preference for Barclays (and Lloyds). Meanwhile, Numis analysts were single-tracked in naming Barclays as their top banking-sector pick for 2015, arguing that the company is undervalued on core earnings.
In fact, at a share price of 233p, Barclays rates outstandingly on the classic trio of measures used by traditional value investors: price-to-tangible book (0.8x), P/E (9x) and dividend yield (4%). The company also looks great value on the less traditional metric of P/E-to-earnings growth (0.5x).
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