April 23 (Bloomberg) -- H&T Group Plc, the pawnbroker that fell the most in 10 months yesterday after rival Albemarle & Bond Plc issued a profit warning, should recover as its store portfolio matures, according to Westhouse Securities.
“H&T’s core pawnbroking operation is continuing to progress,” Rob Sanders, an analyst at Westhouse who recommends buying the stock, wrote in a note today. “Our investment case for H&T is predicated on an increase in profit and cash generation as its store portfolio matures. The investment case is still very much intact.”
Albemarle & Bond fell the most since 1995 yesterday after saying that a fall in profit at its gold-buying unit may accelerate as gold prices weaken and its pawn loan business faces more competition with less gold jewellery in circulation. Full-year earnings will be “materially below current market expectations,” it said.
H&T declined 0.8 percent today to 265 pence after an earlier drop of as much as 2.6 percent. The stock fell as much as 8.2 percent yesterday and closed down 4.6 percent. Albemarle & Bond’s share price was unchanged today after a plunge of 35 percent yesterday.
“We continue to prefer H&T,” Andrew Wade, an analyst at Numis who advises buying H&T and has a “reduce” commendation on Albemarle & Bond, said in a note. H&T is “a better managed, more conservatively forecasted business.”
Albemarle & Bond said April 19 after the close of trading in London that “new leadership is needed.” Chief Executive Officer Barry Stevenson will bring forward his planned retirement and leave the board, the Berkshire, England-based company said.
Of five analysts who share data with Bloomberg on H&T, four advise buying and one rates the stock a hold. Of six analysts who share data on Albemarle & Bond, two advise selling, two say buy and two have a hold recommendation.
H&T has opportunities in the “increasing availability of existing pawnbrokers at realistic valuations,” according to Westhouse’s Sanders. The fact that H&T didn’t give an update after an annual meeting last week indicates it’s “comfortable with the current forecast range” for its earnings, he said.
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