Broker tips: Home Retail, JD Wetherspoon, 888

11th Sep 2009 13:17

The share price of Home Retail Group has been back-pedalling rapidly since the Argos and Homebase owner released a trading update on Thursday but for those who have not already sold Pali International thinks the shares are worth holding at their current level.Some profit taking after the share's recent good run was inevitable, reckons Pali analyst Nick Bubb. The broker has raised its rating from 'underperform' to 'neutral' while expressing a preference for sector peer B&Q owner Kingfisher.'Despite worse-than-expected gross margin pressures, Home Retail has still delivered more profit upgrades and the rating now looks less demanding,' Pali reckons.Dutch investment house ING is a seller of the shares, despite upping its price target from 220p to 255p.So long as the UK pub-goer remains in cash preservation mode, earnings forecasts for pub group JD Wetherspoon look eminently achievable reckons Charles Stanley.The main drag on the share price is likely to be concern over the company's debt position, the broker reckons.'Consistent with the entire pubs sector, there remain concerns over refinancing issues at JDW and the next date for news looms in Sep-09 ... Positive refinancing news will leave the way clear for share price appreciation,' Charles Stanley believes.The broker has reiterated its 'buy' recommendation and 495p price target.Broker KBC Peel Hunt has also reiterated its 'buy' recommendation but has lifted its price target from 520p to 590p following the pub group's full year results on Friday morning.'The shares are up 28% in the last quarter but are not yet up with events in our view, with a further 46% to rise against their 2006 high,' states KBC analyst Paul Hickman.The broker is upgrading its profit before tax forecast for the current financial year by 7% to £73.1m. 'This produces 10% earnings growth against 18% for FY09. We believe there is plenty more potential for upgrades,' Hickman said. 'Our FY11 forecast similarly gives 10% growth to PBT [profit before tax] £ 80.2m and EPS 39.3p,' he added.The deal with Harrah's, a heavy hitter in the US gambling industry, is transformational for online gaming firm 888 Holdings, KBC Peel Hunt believes.The deal with Harrah's addresses two issues, KBC believes, namely the continued credibility of its business to business (B2B) strategy and its decision not to vigorously pursue a settlement with the Department of Justice.'This should be the catalyst for a re-rating and we upgrade to a Buy,' said KBC analyst Nick Batram, who has a 93p price target for the stock.