Broker tips: Sage, William Hill, Land Securities

19th Jan 2011 11:51

Financial services firm Matrix says that property giant Land Securities looks the best value of the three large cap London/retail plays at present and places the stock in its 'add' category.The property group highlighted steady progress with lettings in its interim management statement on Wednesday, noting that it had secured planning consents for its development programme."Management remains confident of the outlook and expects further buying opportunities although recognises that bidding will remain competitive. With regard to the occupational market, it believes there will be mixed news but expects occupational demand from large corporates to remain steady," says analyst Miranda Cockburn.Matrix says the shares look the best value compared to sector peers British Land and Hammerson, and are trading at a discount of 7% to its 2011 net asset value estimate of 752p. The broker therefore retains its 'add' rating and target price of 736p.Sage is "back in the game," according to Panmure Gordon, after Tuesday's launch of a new product set out its stall as a modern growth-orientated software business.Sage launched Sage One which offers three different services to small- to medium-sized enterprises and their accountants: cashbook (managing customers, suppliers, transactions, banking, etc.); accounts (invoices, online VAT returns, etc.); and accountant edition (giving accountants anytime/anywhere access to client data, etc.)The group currently trades on a subsector valuation, with a price-to-earnings valuation of 13.9 against a sector on 16.5, but analyst George O'Connor says that "a growth-orientated product set should address the valuation gap.""Sage One gives CEO Guy Berruyer something to crow about at the first quarter IMS which would otherwise have been a relatively drab 'trading in line' affair," adds O'Connor.Ahead of the interim management statement (IMS) later this month, the broker expects the company to report that trading is in line with expectations. Panmure maintains its 'buy' rating and target price of 334p.Peel Hunt has raised its forecasts for William Hill, but says it is difficult to see what will be a catalyst for a re-rating on the bookmaker in a challenging 2011.A favourable run of sports results and strong machines performance means that 2010 results will surpass the broker's expectations has more than offset the negative impact from weather-hit sports fixtures. As a result, Peel ups its pre-tax profit estimates from £210 to £220 and earnings per share forecast from 18.8p to 21.2p.William Hill Online profits showed a 22% improvement on 2009, and Retail put in a resilient performance with operating profits flat year on year despite the weather."The challenging consumer backdrop, lack of World Cup boost and additional VAT is likely to mean that 2011 will be a tough year. However, a combination of tight cost management and the benefits of the banking deal agreed late last year means that we are now expecting some bottom line growth," says analyst Nick Batram.The broker labels the stock a 'hold' and confirms a target price of 184p.Panmure Gordon also has a "hold" rating on the stock, and has pushed up its target price to 188p from 170p previously, after the bookie said full year results will be at the top end of market expectations.Daniel Stewart, meanwhile, thinks the strong performance of William Hill Online will throw some unwelcome attention on the web-based offering of long-term rival Ladbrokes."If Ladbrokes is not able to execute a deal in the online space we recommend switching from Ladbrokes into William Hill," the broker's analyst, Michael Campbell, advises, adding that William Hill trades at a 19% discount to Ladbrokes on a fiscal 2011 consensus ratio of enterprise value/earnings before interest, tax, depreciation and amortisation.