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Tesco, TSB, Rio Tinto, 4imprint, Akers Biosciences...

Tesco downgraded by Deutsche, which said interims leave many questions unanswered. Rio can survive low iron price environment and 4imprint impresses.
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Tesco’s (LON:TSCO) delayed interim results left a lot of questions unanswered says Deutsche Bank, which has reduced both its profits forecast and price target.

The broker said it is clear that the commercial income overstatement will affect second half profits and management state that "full year profitability could ... be impacted by actions to we choose to take". 

The statement also contained few clues on strategy, no clarity on dividend, balance sheet or restructuring. 

As a result, Deutsche has reduced its price target to 20% to 180p, reflecting both lower earnings forecasts and higher debt and pension deficit.

The broker has cut its forecast for underlying UK earnings this year by 23% to £814mln and overall group underlying profits by 14% to £1.83bn.

“What is clear is that the new management team need more time, and that everything is still on the agenda.”

Rio Tinto (LON:RIO) is a buy says Canaccord, where its strong free cash flow growth underpins a rising dividend and a  strengthening balance sheet. 

“The falling iron ore price has led to steady earnings and cash flow downgrades; however, we can see substantial cash surpluses  generated from the assets, without further cost cutting down to iron ore prices of  US$65/tonne to 2017.”

TSB’s (LON:TSB) third quarter results were better than expected said Credit Suisse with underlying profits at £42mln.

Income was light (mainly on weak volumes) with costs beating significantly.

Having been weak into these numbers, Credit Suisse expects the stock to hold well but longer term, profitability concerns remain and the broker’s view remains underperform. Target price is 250p.

4imprint’s (LON:FOUR) latest results impressed Peel Hunt, with third quarter revenue growth in North America 25% higher compared to 25% the first half’s 23%. In the UK, revenue growth accelerated to 27%.

Peel Hunt added it has upgraded its 2014 full year numbers by 10% and on the basis of its 2016 forecasts its new target price is 850p. Buy.

Tidal wave specialist Atlantis Resource’s (LON:ARL) £5mln fund raise means that as well as meeting its MeyGen project commitments it can also progress its turbine design and take other projects forwards. 

Once all phases of MeyGen are built and the project de-risked to a discount rate of 12%, fair value would rise to 290p per share, but tidal power’s predictable production should mean a lower discount in future.

On an 8% discount and today’s ownership structure, fair value would be 385p per share, the broker adds. Buy.

Medical diagnostics specialist Akers Biosciences (LON:AKR) has set up a joint venture to research and market its products in China.

Broker FinnCap noted that China’s IVD (in vitro diagnostic) market was estimated to be worth US$2.1bn in 2012, with a growth rate of about 25% a year. 

Quoting one source, it said the number of clinical laboratories in China was estimated to be around 20,000, which corresponds to the number of hospitals in the country. Yesterday, shares jumped 8% to 250p.


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