Broker tips: British American Tobacco, Imperial, Galliford, StanChart

18th Sep 2012 12:17

After reviewing key news-flow across the industry in the prior month as well as the latest market data for Spain and Japan cigarettes, Swedish and US smokeless, and US cigars, analysts at Nomura have up-dated their forecasts and price targets for the companies within this sector where appropriate. In fact, Nomura raised its price targets on all the tobacco names it covers as a result of its updated WACC (weighted average cost of capital) estimates. These are meant to reflect its new assumptions around the risk free rate and equity risk premium. As well, the broker explains that it has also updated its cost of debt estimates where appropriate. Its new target prices are: BAT 3500p (+3.5%), PMI USD 80.50 (+3.0%), Imperial 2230p (+1.5%) and Swedish Match SEK 285 (+3.5%).Its favourite stock is British American Tobacco. Analysts at Peel Hunt have today issued a relatively upbeat note on shares of house-building and construction outfit Galliford. In their own words, "The three-year growth plan has more than delivered, with profit before tax (PBT) of £63m. Driving for a 300 basis-point gain in margins over and above market-driven improvements is the new target and should help deliver profit before tax in fiscal year 2015 of £100m (96p). Dividend policy has been improved again and, on delivery of this result in fiscal year 2015, we forecast dividends per share of 55p. The shares remain cheap on a year three price-to-earnings multiple of less than 7x and a yield of above 8%; our target price of 825p has scope to increase."Following Standard Chartered´s Investor Day analysts at Credit Suisse (CS) have decided to remain Neutral while maintaining their price target of 1,460p. That despite the lender reiterating existing targets and with management seen remaining confident. Thus, says Credit Suisse, "we see the risks and rewards as evenly balanced at current levels, although in the short term there could be positive news flow on the US litigation."AB