Broker tips: SSE, Howden Joinery, StanChart

Oversupply in global liquid natural gas markets was set to drive European gas prices down by more than 20% in 2017-2019.

Things would be even worse in the medium-term, with Goldman slashing its price forecasts by up to 30%.
The UK, Italy, France and Iberia would be the most impacted, Goldman said.

With the above in mind, it added SSE to its conviction list as a 'sell'.

"We expect EPS to fall 19% in 2015-20E, and our forecasts are 10%-20% below Reuters consensus in FY18-19E at EPS and more than 40% below at DPS."

Another London-listed stock for which Goldman´s new forecasts implied a "material" deterioration in earnings was Drax.

In the same report Goldman lowered its view on Centrica to 'neutral' from 'buy' and trimmed its target price by 5% to 215p.

Howden Joinery managed to skirt the troubles seen elsewhere in the sector since summer and October trading was "outstanding", so the shares have scope to recover after the battering they took on the heels of Travis Perkins´ warning last month, N+1 Singer told clients.

"Performance in H2, including the key October trading period, has been outstanding at +10% LFL particularly once positive gross margins are also factored in," N+1 Singer said.

Thursday´s 10% like-for-like sales figures from the company imply a two-year growth rate of about 22% and represent a substantial market outperformance, the analysts said.

Furthermore, the manufacturer and supplier of fitted kitchens, appliances and joinery products should continue to avoid the deterioration in business seen by some companies in the sector "even if housing activity softens slightly given the tenuous link there vs consumer confidence and replacement cycles (still recovering)".

The impact of the Living Wage should also be immaterial given Howden´s bonus/salary structures.

After Travis Perkins´s warning, shares in Howden Joinery fell back to a price-to-earnings multiple of 16.6 versus the 20 seen at the June peak, N+1 Singer pointed out.

"The Free-cash-flow yield is 5% (or 6% ex deficit injections). We have edged our target price up 2% to 510p, so with >13% total shareholder return we upgrade to 'Buy' from 'Hold'."

Standard Chartered's restructuring plan is "rather uninspiring" Macquarie told clients on Thursday, downgrading its recommendation because in its opinion the bank has turned itself from a '2018 hope story' into a '2020 hope story'.

The Asia-focused lendder's strategic plan lacked direction, Macquarie said, and the capital raise only addressed the smallest of the lender's three problems.

The other two were asset quality and "a potentially broken business model that has to be restructured by exiting subscale and underperforming markets and businesses," analysts wrote.

"To raise new equity at 0.40x price-to-book value (1H15) leaves one scratching their head. It is far from certain where the new capital may go and raises the question whether the capital increase is enough, in our view," they added.

Asset quality was "deteriorating rapidly" and it was unclear how deep the rabbit hole went.
Excluding the value of the rights issue, the new 12-month target price was set at 550p, down from 700p and its recommendation downgraded to 'underperform'.