Thursday newspaper share tips: Dixons Carphone has long-term potential

Investing in Dixons Carphone is a good long term plan, according to The Times’ Tempus.

The FTSE 100-listed electronics and travel retailer saw like-for-like revenue rise 5% over the period, to £4.39bn.

Its proforma headline profit before tax was also up, 23% to $121m, with statutory profit before tax £78m from its continuing operations.

In the report, Dixons Carphone said it had improved its market share across the UK and Ireland, Nordics, Greece and Spain markets.

The six month period saw the first anniversary of the merger between Dixons Retail and Carphone Warehouse Group.

Tempus said the merger has created a lot of one-offs for the company including rent on properties vacated and the collapse of Phones4u in September 2014.

The company also has to deal with the two-year iPhone cycle, with only an upgrade in 2015 compared to a brand new model in 2014.

However Tempus noted there are some positives, with the company gaining market share and being a place where customers can actually see and touch products before they purchase them.

While there were initial doubts over the merger, Tempus said the company is well place to grow, helped along by its competitors’ weakness, and rated the shares at ‘buy long term’.

Over in The Telegraph, Questor was impressed with AstraZeneca’s expanding respiratory division.

The FTSE 100 company announced yesterday it will acquire the core respiratory business of Takeda Pharmaceutical Company for $575m (£382m).

The deal includes the expansion of rights to chronic obstructive pulmonary disease (COPD) treatment roflumilast, also known as Daliresp in the US and Daxas elsewhere.

AstraZeneca company has marketed the oral inhibitor drug in the US since it acquired the rights in the first quarter of 2015, and said acquiring the global rights will support the company’s respiratory franchise and complement the company's portfolio of treatments for severe COPD.

Questor said the move is an attempt to fight the patent running out on one of its major drugs, its cholesterol treatment Crestor.

“To combat this, the company has reorganised research efforts to target the key areas of breathing problems, heart disease and cancer, which are all health issues associated with an ageing population.”

It said next year is a critical one for the company, with earnings growth predicted from 2017, and that it might be safer to wait until late 2016 to buy shares.

“However, stock markets price today are based on the forecast revenue and profits up to a year away.”

With that in mind, Questor rated the shares at ‘buy’.