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Broker spotlight: Just Eat, Royal Bank of Scotland, Glencore, The AA, Range Resources...

Just Eat growth whets appetite of brokers. RBS and Glencore downgraded but AA has potential once debts are sorted.
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Takeaway food app Just Eat (LON:JE) remains on the menu at JP Morgan as third quarter sales jumped by 56% while orders were 51% better.

The broker said it was a “reassuring” update, with order growth so far this year only just below 2013 despite the much higher base.

JPM expects the company to at least meet its like-for-like order growth forecast of 41% for the full year, while the results highlight the company’s substantial growth potential. Overweight remains the investment stance. 

Jefferies also adds that order growth remains robust at 56% including the newly consolidated French business and senior management appear confident over 2014.

“The recent VC lock up expiry, we think potentially crystallises a good entry to the stock.” Buy with a  price target of 450p.

Royal Bank of Scotland (LON:RBS) has run into some  downgrades after its latest trading update. The numbers were as good or better than expected especially at troubled subsidiary Ulster Bank, but growth prospects don’t justify the current value says Investec, which has downgraded to sell, preferring any of Barclays (LON:BARC) , Lloyds (LON:LLOY) and TSB (LON:TSB).

Glencore (LON:GLEN) is the most exposed of the miners to the thermal coal market and  Nomura has downgraded its rating to  downgrade to reduce with a 300p (330p) target price.

A 10% change in thermal coal prices affects next year’s earning by 13% says the broker, while the potential return for a bid for Rio Tinto will likely remain an overhang in the near term and could diminish the market’s hopes for cash returns. Nomura also remains cautious on the European mining space.

The AA (LON:AA.) meanwhile is a buy with a target price of 417p, says Liberum, which adds the roadside recovery and insurer is market leader in a sector with high barriers to entry, high margins and impressive cash generation. 

High debt remains the potential bump in the road, but the broker expects the group slowly to de-leverage, payoff the expensive debt (including £1bn at 9.5%) and transfer value from debt to equity.

Elsewhere, Stratex (LON:STI) has now acquired 33.5% of Goldstone Resources, which is now planning to build on the 600,000oz Au at 1.77g/t at the Homase-Akrokerri project to create an open pittable, oxide resource. 

The project currently contains around 100,000oz that are in the oxide portion of the resource and further work will examine the potential for additional oxide ounces along strike, in parallel structures, under adjacent geochemical anomalies, and by potential combining with other known resources within trucking distance. Buy Stratex says Northland, which has a 7.7p target price.

Range Resources’ (LON:RRL) binding Memorandum of Understanding with Core Capital Management, a China-based institutional investor, for US$50mln of potential funding is a positive step says Cantor Fitzgerald.

it will allow progress on maintenance of the rig fleet and to move forward with the next phase of implementation of the waterflood projects in Trinidad. Buy with a target price of 3.3p says the broker.



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