Mindful Money’s Monday share-tips: Marks & Spencer, Mothercare, Ashmore & Vedanta Resources

7th April 2014

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This week sees Thursday hosting most of the company reporting action with Marks & Spencer, Mothercare, Ashmore and Vedanta all updating the market writes Philip Scott.

Brokers are anticipating that Marks & Spencer’s pre-tax profit for the current full year will fall by around 6% to £625m when the blue-chip retail giant, which has seen its stock rise by 20% over the past year, reports its fourth quarter trading update.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers says: “Growth in same store or like-for-like food sales is expected to be offset by falling same store general merchandise sales. The absence of Easter in the period compared to the prior year will impact, although management may well draw attention to the recent launch of its new website and in-house e-commerce platform.”

Prior to the announcement, and in contrast to major rival Next, which is rated a ‘buy’, consensus broker opinion, continues to point towards a ‘strong hold’.

Investors will be keen to hear how specialist value-oriented asset manager Ashmore Group is coping with the turmoil engulfing emerging markets, when it publishes its latest interim management statement.

Investors will be hoping to see the rate of outflows from the FTSE 250 listed firm’s funds has slowed. Emerging markets have been increasingly volatile lately, leading to a recent negative investment performance and a 14% drop in the group’s share price over the past three months.

The broker consensus however has the share rated a ‘buy’. But for its part JP Morgan Casenove has reaffirmed its ‘neutral’ stance on the stock while Sheridan Admans, investment research manager at The Share Centre lists them as a ‘hold’. He says: “The last update reported a fall in net profit and there have been concerns over pressure on its margins, so investors will be hoping for an update on this.”

Also reporting its fourth quarter/full year trading update on is Mothercare. The FTSE Small-Cap constituent has endured a battle of late with its shares down 39% in one year and by a hefty 57% over the past three months.

Following the surprise resignation of chief executive Simon Calver, interim appointment Mark Newton-Jones, formerly of Shop Direct, is temporarily leading the company.

Attention will remain on the group’s challenged UK operations. Bowman says: “Relatively tough comparatives provide the backdrop, with Q4 UK like-for-like sales unchanged last year. Consensus pre-tax profit for the current full year is expected to prove flat at around £8.3m. For now, and with the likes of Next and Toys R Us competing hard in the group’s markets, analyst opinion currently denotes a ‘sell’.”

FTSE 250 metals and mining group Vedanta Resources has endured a 14% share price drop in the past year but the last month has witnessed them rebound by 8% and when it announces its fourth quarter results this week, Admans is hoping to hear about continuing strong production numbers.

He notes that production should remain near record levels for both oil and gas and investors will welcome exploration updates from the Cairn India energy business.

Admans says: “Commentary on the resumption of iron ore production in various states after mining bans were lifted will be welcomed. Investors will be keeping a close eye on the company’s debt level, which is relatively high.”

Against a neutral broker consensus, Admans lists the shares as a ‘buy’, while analysts at JP Morgan Casenove have reiterated an ‘overweight’ recommendation.

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