Broker tips: Berkeley, Dunelm, Betfair

7th Apr 2011 12:21

RBS ups its forecasts for housebuilder Berkeley Group after it highlighted a further step-up in volume momentum.The broker notes that the group's reservation growth rate has risen to 25% year-on-year in the second half, from 20% in the first, driven by both a shift in group strategy and the benefit of a strong underlying London market.As a result, 2011 and 2012 pre-tax profit forecasts are raised by 4% and 10%, respectively.A 'buy' is maintained, and the target price is raised to 1,180p, from 1,060p.Nomura keeps its 'buy' rating on Dunelm given its growth potential, but tweaks down forecasts as it foresees weaker-than-expected sales trends.The homeware retailer reported a disappointing second quarter (October to December) with like-for-like (LfL) sales down 4.2%, against a tough comparative of a 11.6% LfL increase."For the third quarter Dunelm faces a +7.1% (adjusted) LfL comparative, easier than the second quarter but with increased macro headwinds. We therefore forecast -3.5% LfL for the third quarter," said analyst Christopher Walker.The target price is cut to 530p, from 550p.Its bad news for betting firm Betfair Group as UBS suggests that a portion of its revenues could disappear as a result of German regulation.The broker highlights reports that Germany has proposed to licence betting form 2012 with a 17% turnover tax, "effectively banning sports betting in this market.""If this regulation goes ahead, its German income stream [which accounts for 5% of revenues] could cease as of next year," the broker said.The broker keeps its 'sell' rating and lowers the target price from 890p to 850p, noting the high regulation risk affecting over a quarter of group revenues which currently come from unregulated markets.---bc