Today I’ll be discussing the outlook for equipment rental firm Ashtead (LSE: AHT), life sciences company OptiBiotix Health (LSE: OPTI) and real estate firm Intu Properties (LSE: INTU). Would it be wise to invest in any of these today?
Priced to buy?
International equipment rental group Ashtead has demonstrated impressive growth over the past few years and its shares have performed accordingly. However, there’s been a major pull-back recently with the shares falling 24% in the last three months. So is this the beginning of a downturn, or just a temporary pause on its continuing journey upwards?
Well, third quarter results looked good enough with a 15% increase in revenue and 16% rise in pre-tax profits year-on-year. The forecasts also look encouraging, with analysts expecting earnings to jump 28% in the year to 30 April, with further growth of 12% and 7% earmarked for fiscal 2017 and 2018, respectively.
So the good times look set to continue, but are the shares cheap enough to buy at the present time or is the growth already priced-in? Ashtead trades on a forward P/E of 10.6 for the year to 30 April, falling to 9.4, then 8.8, for fiscal 2017 and 2018, respectively. I think the shares are priced to buy at the moment, and bargain hunters might want to take advantage of the recent weakness in the share price.
The healthy option
AIM-traded life sciences company OptiBiotix Health announced today that it has entered into a joint venture agreement with Dutch health and nutrition firm DSM. Both companies will co-operate in new product development based on OptiBiotix’s proprietary technology platform OptiBiotic.
OptiBiotix specialises in developing products treating obesity, high cholesterol and diabetes. The company is still in its infancy and is yet to generate any revenues, let alone profits. But the York-based firm is already generating interest in the investment community and from large multinationals, thanks to a number of promising patents and pipeline products.
I think OptiBiotix is one for long-term adventurous investors who don’t mind taking a risk on an innovative British company trying to make people healthier, and hopefully investors richer. I have a good feeling about this one!
Ebb and flow
Real estate investment trust Intu Properties has been hit by a number of rather bearish broker recommendations over the last couple of months, including one from Credit Suisse last Thursday, issuing an ‘underperform’ rating on its shares. The Swiss broker highlighted concerns that Intu’s property portfolio included a number of large, old centres with high capital expenditure requirements.
It also pointed to weak net rental income growth and a weaker balance sheet than many of its peers. Intu has had mixed fortunes over the last few years with revenues and earnings ebbing and flowing, and no reliable sustainable growth.
Our friends in the Square Mile are expecting earnings to remain flat this year, with a small 4% increase next year. The shares trade on 22 times forecast earnings for this year, falling to 21 next year, which is too high given the lack of sustainable growth.