Broker tips: ARM, Barclays, Elementis

28th Apr 2011 12:46

While Nomura keeps its 'neutral' rating on chip giant ARM Holdings, it hikes the target price by 14% from 500p to 570p, following the company's first quarter results issued yesterday.First quarter revenue came in 6% ahead of forecasts, primarily driven by a 16% beat on the processor division (PD) licensing line, according to the Japanese broker."While PD royalties were 3% ahead, it was very encouraging to see average royalties rise sequentially driven by a strong Cortex chip contribution rising to 17% in the first quarter," Nomura said.Banking giant Barclays has seen its target price lowered by two brokers, RBS and UBS, after its first quarter update disappointed on Wednesday.The lender reported a 9% fall in earnings per share, from 9.3p to 8.5p, while adjusted pre-tax profit rose 10% from £1,822m to £2,004m. Net operating income dipped 1% to £6,478m from £6,557m a year earlier. Meanwhile, the core tier 1 ratio improved to 11%, from 10.8% a year earlier.RBS says the results were "another bump along the journey", mirroring the trends evident across the UK banking sector in the second half of 2010. RBS cuts its target price from 410p to 350p, but keeps its 'buy' rating.UBS, however, retains its 'neutral' rating on the bank and reduces its target price slightly from 334p to 330p, saying that "While capital accretes, lacklustre revenue growth makes delivering an appropriate return on equity a challenge."As a result of the share price strength of speciality chemicals supplier Elementis over the last two years, RBS downgrades its rating to 'hold', from 'buy'.The shares have risen more than sevenfold since their low in April 2009, and have jumped by 19% in the year-to-date, outperforming the STOXX 600 Chemicals index by 14%, according to RBS.After raising its 2011-13 earnings per share forecasts by 3-5%, RBS says that it sees limited upside and believes the "current share price fully discounts what we see as further recovery potential."The target price is raised to 160p, from 155p.---bc