Broker tips: BSkyB, Sage, De La Rue

26th Jan 2010 12:42

Satellite TV firm BSkyB is due an uplift into Thursday's interim results after being impacted by numerous factors recently, thinks Nomura.The company has been weighed by the impending final decision from the OFCOM pay TV review, greater appetite for cyclical companies, BT's £20 pricing for fibre access, and the perception it has a high multiple.'With the exception of the pay TV review (which explains our current 'neutral' rating) we don't share these concerns and believe the stock merits an uplift into results on the 28th January,' says the broker, which slaps a 700p target price on the shares.'At 12.6x P/E in 2011E BSkyB looks fairly valued vs the media sector on 12.5x for EPS growth of 15% in 2010 and 30% in 2011,' it says.Accountancy software giant Sage traded in line with expectations during the last three months of 2009, but needs acquisitions to 're-ignite' earnings, says Piper Jaffray.Net debt at the end of the year was down to £392m from £439m at the end of September, as the company continued to generate cash. 'This level of debt leaves Sage comfortably within its banking covenants and is gradually paving the way for Sage to be able to again look at sizeable acquisitions,' said Piper, which keeps its 'neutral' rating and 229p target price.'These acquisition opportunities remain key, in our view, in order for Sage to re-ignite its earnings growth.'Banknote printer De La Rue today reported strong trading in its third quarter and analysts at Ambrian feel the dynamics driving the outlook remain 'excellent'.The broker, which rates the shares a 'buy', points to a combination of market position, reputation, customer relationships and intellectual property, providing an 'extremely high-quality' earnings stream.'On 13x 2010 forecast earnings and a 4.4% prospective dividend yield, the shares appear undervalued vs current market investment metrics and the historic premium to the market the group has rightly commanded,' read a note this morning. Jonathan Jackson at Killik Capital agrees that the yield remains attractive, but thinks the defensive characteristics of the business are already discounted in the current rating.Meanwhile, Panmure Gordon maintains its target price of 959p and 'hold' recommendation. 'While the shares look to be a "safe bet" with a decent yield of 4%, we believe the shares are up with events, hence our neutral stance for now,' it says.