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Why Shell is a 'sell' and one of the bookmakers is a winner

The bookmakers have been put under the microscope, while Shell has been downgraded.

1-Shell-pecten,-The-Netherlands---Shell-logo-with-blue-sky.jpg
One City broker isn't a huge fan of the oil major.

It sounds like something from the TV crime series NCIS, but the Swiss bank UBS has an operation called the Evidence Lab.

It is part of the new methodology towards research under Juan-Luis Perez, who was poached from Morgan Stanley.

Anyway, UBS’s Evidence Lab has been tracking app downloads at the Apple store as a proxy for the success, or otherwise, of the UK bookmakers. And it has identified an interesting trend.

It suggests that William Hill PLC (LON:WMH) is under intense competitive pressure, with its share of downloads receding from 22% in the first half of 2014 to just 10% in the last quarter of this year.

By contrast SkyBet is doing well (it has gone from 8% to 15%) and Ladbrokes PLC (LON:LADB) has done even better as its app market share has increased to 16% from 5% two years ago.

UBS continues to “prefer” Ladbrokes, which is says it is a ‘buy’ up to 180p, while it has William Hill on a ‘neutral’ recommendation.

The big downgrade of the morning was Canaccord’s move to ‘sell’ from ‘hold’ on Royal Dutch Shell (LON:RDSA).

The broker’s central thesis is that the oil major will struggle to generate the sort free-cash flow that is being mooted in the company’s revamped business plan.

“[The] share price is close to a 12-month high, on the rally in oil prices and weaker sterling,” Canaccord added in a note to clients.

“We share the market's concern on sterling assets, but it is harder to show what incremental triggers there are from here.”

Canaccord’s analysts were also active in the media sector, where they upgraded Lloyd’s List owner Informa PLC (LON:INF) to ‘buy’ from ‘hold’ with a 720p price target.

Credit Suisse, meanwhile, remains lukewarm on the prospect for Vedanta Resources PLC (LON:VED) – even after an upgrade to stock in the miner. It went to ‘neutral’ from ‘underperform’.

The Swiss bank is a fan of the packaging group Mondi Plc (LON:MONI) and rates the shares ‘outperform’. It has increased the price target to £20.25 from £18.80.

Citigroup repeated its sell on the mining giant Anglo American PLC (LON:AAL) and 830p a share price target.

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