Broker tips: Centrica, Howden Joinery, Beazley

22nd Jul 2011 12:19

Credit Suisse recommends to buy UK energy giant Centrica at current levels, saying that its full-year earnings estimates are ahead of consensus, reflecting its bullish view on supply margins within British Gas Residential Energy (BGRE). In regards to BGRE, Credit Suisse forecasts a top-of-the-range figure of £692m for earnings before interest and tax (the energy company is targeting between £500m and £700m). Consensus estimates are centred upon £600m. The broker is more bullish given the 16% electricity and 18% gas price hikes (following on from the 7% price rise in December 2010) and "out-of-the-money" hedge buy-backs last year.An outperform rating and 380p target price are retained.Howden Joinery is a "long-term winner" following its announcement of strong first half results and encouraging current trading, according to UBS, which keeps its buy rating and ups its target price.The firm, which supplies kitchen, bathroom cabinet and joinery products, reported sales of £342m with UK total revenue growth of 4.9% and like-for-like sales of 2.4%. UBS had expected revenues of £341m."Most encouragingly the trading in the first period of [the second half] has seen revenue growth of 10.5%, which we estimate includes c5% from the June price rise but also suggests a volume acceleration," said analyst Alex Hugh.The target price is raised slightly from 145p to 150p.Peel Hunt maintains its hold rating on insurance firm Beazley, saying there is downward pressure on its forecasts based on the losses seen in the first half and the higher-than-expected expense ratio."We view Beazley's catastrophe losses as relatively high given its greater focus on specialty lines and based on this exposure we see it as less well-positioned to benefit from hardening catastrophe rates," said analyst Sarah Lewandowski."However discipline continues to be shown and the dividend is attractive yielding 6.5%. On this basis we rate the stock a hold," she said.The target price of 142p is kept.BC