Broker tips: Go-Ahead, Henderson Group, Ted Baker

Investec downgraded its stance on transport operator Go-Ahead to ‘add’ from ‘buy’ and cut the price target to 2,500p from 2,800p following the company’s full-year pre-close trading update.

The brokerage noted that while the outlook for full-year 2016 was broadly unchanged, the outlook for the GTR franchise margins was reduced.

GTR margins over the life of the franchise are now expected to be around 1.5% versus 3% previously, with the downgrade driven by ongoing additional expenditure to maintain service levels during periods of operational challenges and industrial disputes.

Investec cut its medium-term forecasts around 11-12%, almost entirely due to GTR. It now expects GTR to be marginally loss-making in FY17, reaching breakeven in FY18.

Still, the brokerage pointed out the performance elsewhere in the group has been robust, with the London bus business expected to have a strong end to the year, due in part to rail replacement services.

All the asset managers were facing a difficult second quarter, but a combination of several smaller factors unique to Henderson Group led broker Exane BNP Paribas to downgrade its recommendation on the shares.

Furthermore, its recent stellar fund performance had come off a bit and the manager had a higher exposure to US investors, where the pensions system is mature and penetration of passives/ETF is higher, analysts Arnaud Giblat and Gregory Simpson said in a research note sent to clients

Using its proprietary bottom-up fund flow analysis, Exane said Henderson was seeing outflows in Global, European and US equities, alongside some deterioration in fund performance.

We continue to see upside risk to the company’s target of achieving an operating margin in excess of 40%, Arnaud Giblat and Gregory Simpson said in a research note sent to clients, adding that “upside risks should remain years out”.

Giblat and Simpson downgraded their recommendation on the shares from ‘outperform’ to ‘neutral’ and took their target price from 270p to 240p.

Ted Baker clocked in with strong growth for the first 19 weeks of fiscal year 2017, with sales rising by 11.3% after a 24.2% increase in the year before, despite "challenging external trading conditions" especially in Hong Kong and mainland Europe.

That led Cannacord Genuity analyst David Jeary to reiterate his 'buy' recommendation and 3,571p target price on the shares of the fashion retailer.

Jeary noted continued strong growth at the company's e-commerce channel, with sales up by 32.3%

Wholesale has also put in a solid showing, with sales more than doubling over the course of the past three years, the same analyst said.

"Our positive view and the investment case are based on the global growth potential of the iconic Ted Baker brand," Jeary said in a research note sent to clients.

However, Jeary also pointed out how the stock was trading on calendar year 2016 price-to-earings multiple 21.2 falling to 18.9 for the following year, with the corresponding enterprise value-to-earnngs before interest, taxes, depreciation and amortisation of 13.6 and 11.3.