UBS Ups Inditex to Buy Rating, PT €35

New strategy for textile giant company Inditex into e-commerce and expansion in multi-channel is a clear positive according to UBS. Per today’s note:

« We believe that the recent investment in RFID (Radio Frequency Identification Technology) sets ITX up well for further multi-channel revenue growth, and at a lower cost to serve.

We maintain sales estimates but now assume 30-40bps EBIT margin leverage over the next few years (from flat). Estimates increase accordingly, and with capex continuing to rise below the rate of sales growth, cash will also increase faster.

We raise dividend estimates but upside risk still remains here. Our PT is based on DCF and rises to reflect estimate upgrades and long term margin upside. »

Barclays Ups Vodafone to Overweight

From today’s issued report by Maurice Patrick and Matthieu Robilliard:

« Vodafone offers a 2018e March 6% DY, and yet many question its sustainability, not just its potential to grow. People also question how Vodafone will be able to monetize data, and the extent to which convergence presents competitive/strategic risk; whether regulatory headwinds will ever end; when cost cutting will be net vs gross; when capex will stop increasing; and whether Vodafone will merge will Liberty Global. We see this as a « rear-view mirror » way of looking at Vodafone, stuck in a 200-230p trading range. However with an EBITDA CAGR of +4-5% in the next three years and positive revenue/cost momentum, we believe the above arguments are far less relevant. We raise estimates (significant change from the past) and our PT to 280p (was 230p), and raise our rating to OW (was EW), We also make Vodafone our Top Pick, replacing Telenor (OW). »

Goldman Sachs Initiates Ceconomy at Neutral

« We initiate [Ceconomy] at Neutral, with an €11.6 price target (c.2% upside). We 
believe: 1) a low-growth consumer electronic retail category channel shift to online sales will offer some growth, but store LFL could stay negative
 (or flat); 2) underlying cost inflation (especially in stores) could offset the
 benefits from self-help initiatives (including Services & Solutions
 penetration, loyalty program etc.); 3) our pricing survey shows 2-5% price
 differential with Amazon in Germany, which we believe needs to fall; 4) a
 c.5% EBITDA margin (assuming no exit from loss-making countries) looks optimistic, but we expect EBIT margin/FCF to improve in FY18. »

Credit Suisse Downgrades Virgin Money to Neutral

Here’s the summary of CS’s note published today: « We downgrade Virgin Money (VM) to Neutral and reduce our 2018/19E EPS by 6%/22% respectively, after reviewing its business and recently announced digital bank/SME strategy. Our new TP of 305p (previously 330p) implies a valuation of 1.0x 18E TNAV. We prefer OneSavings (OP, TP 460p) and Clydesdale (OP, TP AUD6.00) in terms of the fundamental theses, and relative valuations look reasonable vs VM. »

Broker mentions that it is « cautious on margin outlook » for the company.

« We think there are constraints on deposit and mortgage pricing, and we expect a neutral mix benefit from credit cards (vs c10bps/4bps in FY16/17). Our 18/19E earnings changes reflect weaker margins and growth and, for 19E, £35m higher costs associated with the digital bank », they add in the report.

Kepler Downgrades Italgas to Hold from Buy

« In the last year, Italgas’s share price has risen by 64% (YTD: 41%; 6M 11%) » says the broker. « The share price has reached our TP of EUR5.3, thus we downgrade our rating from Buy to Hold. Our ranking of Italian regulated utilities is now: 1) SNAM (Hold, TP EUR4.5); 2) Italgas (Hold, TP EUR5.3); and 3) Terna (Reduce, TP EUR4.9) », they add.