Broker tips: RSA, LandSecs, JD Wetherspoon

15th Jul 2009 11:53

Insurance group RSA was the subject of bid speculation on Wednesday morning which boosted the share price but Panmure Gordon still believes the shares are worth buying, particularly after RSA made a "smart move" this week in reducing the group's pension scheme exposure."In what appears to be a rather clever asset swap, it [RSA] has effectively removed the liability for longevity and market risk of 55% of its pensioners in retirement," Panmure Gordon notes."The shares have fallen back recently (-11% in the last three months), as the perceived less defensive life sector has staged a recovery of sorts, but trading at 1.1x 2010E net tangible assets (102p/share) and with an attractive 6.8% 2009F dividend yield, the shares offer great upside potential, in our view," Panmure analyst Barrie Cornes believes.Cash-strapped real estate investment trust Land Securities has made good progress selling off assets since its rights issue and with the share price having shifted into reverse since the company's May trading update, the time is right to buy the shares, broker KBC Peel Hunt asserts.The broker has upgraded the stock from "hold" to "buy" while leaving its earnings forecasts unchanged. "The company has made good progress selling down post the rights issue with over £500m of sales since 31 March (this is roughly half what we expect the company to sell post the rights issue)," KBC stated.The broker has a price target of 490p for the stock. Brokers Charles Stanley and KBC Peel Hunt are united in their admiration for pubs group JD Wetherspoon, which on Wednesday morning said like-for-like sales in the 50 weeks to July increased 1.2%.Charles Stanley said Wetherspoon's outlook has turned "far more positive", with management confident of achieving market expectations for the current financial year, which the broker takes to mean it will hit the top end of the forecast range for pre-tax profit, which spans from £53m to £64.2m. Charles Stanley is forecasting profit before tax of £63.2m.Charles Stanley has retained its price target of 495p.KBC Peel Hunt is also a buyer of the shares with a price target of 520p. "A fully managed and branded system with excellent execution of its value-based offer does not really merit a 25% EV/EBITDA discount to the rest of the sector for FY10E," KBC asserts.The broker has upgraded its profit before tax forecast for fiscal 2009 to £62.7m from £58m following the trading update.