Broker tips: Galliford, Ericcson, Vestas

4th Jan 2012 13:39

Analysts at Nomura are this morning commenting on the 'read across' for communication equipment providers from Acme Packet´s profit warning yesterday. They comment that their top picks in their coverage universe are Ericsson and Cisco. Regarding Cisco, they believe that it is heading toward a period of gross margin stabilization and possibly recovery in 2012, as we expect switching margins to stabilize and the negative impact on margins from Chinese contracts to abate. Plus, revenue comparisons get easier for Cisco in fiscal year 2012, as the company was negatively impacted from the macro slowdown earlier than its peers.As for Ericsson, they believe that it is poised for stable or improving gross margin in 2012 as it should benefit from a stable contribution of modernisation contracts together with structural growth in services.Analyst Rachael Waring at Panmure Gordon has today issued a very positive note on construction and house building group Galliford Try. In her own words, "In January 2011 we picked Galliford Try as our 'Stock of the Year'." She adds that, "Since then, the shares have risen by 50% and paid the largest dividend in the sector, outperforming the FTSE All Share by 55%. "For the first time in this analyst's 19 year stock broking career, the 2011 pick is rolled over to become the 2012 key pick. Galliford is the most undervalued stock in the sector on EV/EBITDA, P/E and dividend yield."Analysts at Credit Suisse have today slashed their price target on shares of Danish wind-turbine maker Vestas.Credit Suisse is of the opinion that the company faces "acute" risks as regards its financial flexibility, adding that, "we do not see any positives for Vestas until structural and cyclical macro factors are addressed."For that reason, they believe that Vestas´current P/E multiple of 10 times estimated 2012 earnings, which is in-line with that of the pan-european capital goods sector is unmerited and that its shares ought to trade at a discount.AB