Broker tips: Experian, Ashmore

15th Jul 2010 12:28

Credit checking firm Experian issued an interim management statement which showed a stronger start to the year than Charles Stanley was expecting."There are a number of positive trends within today's release. One feature we would highlight is the improved performance from North America which accounts for 53% of group revenue and 63% of EBIT [earnings before interest and tax]. Here organic revenue growth was +5% in the first quarter compared to a flat year in FY10 [fiscal 2010]," notes Charles Stanley analyst Tony Shepard.Revenue from credit services remains under pressure but the effects of the financial crisis have been ameliorated by the group's efficiency programme. "Going forward, the performance of Credit Services within the North American and UK divisions will be an important metric to watch. Although the comparatives are weak, there has been some improvement in North American Credit Services," Shepard said, adding that he expects North American credit services to return to growth in the second half of the year."Experian could benefit from some of the austerity measures especially fraud prevention in the public sector," the broker suggests.Charles Stanley has retained its "buy" recommendation.KBC Peel Hunt has bumped up its earnings forecasts for Ashmore Group after the emerging markets asset manager's trading update on Wednesday.The broker has factored in the higher than expected assets under management (AuM) figure Ashmore announced and upgraded its forecasts for the year to end-June 2010 by 12%. It is now predicting profit before tax of £201.6m, up from its previous estimate of £180.2m. The broker is assuming the dividend will remain unchanged.The forecast for the year to end-June 2011 has been bumped up by 7% to £189.9m."As always, forecasting the level of performance fees in any period is an inexact science. We have kept our assumptions relating to next year unchanged, purely adjusting for the higher AuM. We therefore expect performance fees of £37.2m for the year, clearly well below the level achieved in 2010; this reflects the high returns generated over the last year in, primarily, external debt and high yield. Also, with more institutional business being won, in many cases there is no performance fee element," KBC analyst Stuart Duncan said.The broker has reiterated its "buy" recommendation and moved up its price target from 305p to 320p.