LONDON (ShareCast) - Severn Trent is one of a dwindling group of remaining publicly listed water companies. For The Times´s Tempus the bidding for the water firm is not yet over. While the newspaper column does not think that its suitors will pay the 23 pounds which some institutional investors expect, it does expect a higher price than the 20.79 pounds already tabled by investment consortium Borealis Infrastructure Management. The key, as is well known, is the value assigned to the company´s debt. Borealis is trying to scare investors by arguing that the company´s net debt is understated and that the regulator - Ofwat - will tighten the return on capital allowed. Another aspect to be taken into account is that the deadline for the offer could yet be extended. If cautious then an investor can always sell now and then buy back the shares for less if he believes the bid will fail, Tempus adds, although the its expectation is rather the contrary.
Shares in speciality chemicals group Johnson Matthey have been on a tear as investors factor in prospects for a recovery in vehicle sales in the US. Longer-term, tightening global emissions standards are a positive driver for the group. In fact, new emissions regulations in Europe for diesel truck filters will kick-in next year, raising demand for its products. As an aside, it must be kept in mind that the group has around a third of the global catalytic converter market. At a 2014 earnings multiple of 17.4, falling to 15.8 the valuation looks pretty full. However, following the release of the numbers yesterday, Bank of America Merrill Lynch upgraded its rating to buy, as it believes it heralds the start of an earnings upgrade cycle for the group. Indeed, management sees growth accelerating from 2015. Perhaps so, but The Daily Telegraph´s Questor team remains happy with a hold rating.
Alliance Pharma´s purchase of Syntometrine from Swiss outfit Novartis almost completes the diversification of the company´s drug portfolio. To be had in account, while the firm often has generic compounds these tend to be 'niche.' Further, the company has the ability to keep growing from internal resources alone. There is a strongly supportive shareholder base and the stock, up a penny at 37.5p, has come on from little more than 20p less than a year ago. One for the longer term, Tempus says.
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