Broker tips: Punch, PZ Cussons, Ashmore

14th Apr 2011 12:44

Credit Suisse retains its 'outperform' rating at pub owner Punch Taverns, but cuts its target price saying that a turnaround in its Spirit arm its not yet fully appreciated by the market."We believe the demerger makes sense, as it will separate the Spirit business, which is growing and has turnaround potential (driven by a capital investment programme), from the problematic Punch A and Punch B securitisations, which are draining cash from the PLC," said the broker.However, with Punch and Spirit accounting for 25p and 75p of value, respectively, the broker sets its new target price at 100p, from 116p.Although trading in Asia remains strong for consumer products group PZ Cussons, Panmure Gordon draws attention to the persisting headwinds in Europe and Nigeria, and cuts its target price from 365p to 345p."The impact of ongoing weak European consumer markets coupled with high levels of input costs and disruption to the seasonal peak sales period in Nigeria due to the elections have weighed on group performance," said the broker."Asia's performance remains strong and in particular Indonesia, where the re-launch of Cussons Baby is driving profitable growth but the company does highlight a tightening of the consumer environment in Australia." A 'hold' rating is kept. While Ashmore Group's funds under management (FUM) in the third quarter were ahead of RBS's expectations, the broker keeps its 'hold' rating but says the results justify the stock's premium rating to the sector.The emerging markets asset manager reported FUM of $50.3bn, 3.5% ahead of the broker's $48.6bn forecast, while fund flows of $2.3bn exceeded estimates of $3.1bn.However, with revenue margins to decline and recent performance fees unlikely to be repeated - driving operating margins down - the broker stays cautious with a 'hold'. The target price is kept at 365p. ---bc