Broker tips: Vodafone, Carpetright, Betfair

14th Dec 2010 15:45

Vodafone deserves a premium rating due to the combination of the mobile phone giant's improving profit trend, premium cash conversion and clear dividend upside, says Nomura.The iPhone is expected to be on wireless operator Verizon's (VZW) shelves in early 2011, and analyst James Britton expects its impact to boost net income at Vodafone, which owns about 45% of VZW, by 2-4%, or $280m-560m. Nomura amends its VZW forecast and therefore upgrades Vodafone earnings per share assumptions by 2% for 2012 and 4.5% for 2013. It sticks with a 'buy' rating and lifts the target price by 5p to 205p.Carpetright's interims came in lower than finnCap was expecting as the broker predicts that further downside risk remains.Carpet and floor coverings retailer Carpetright reported an adjusted interim pre-tax profit of £10m for the first half, below the broker's forecasts of £15m.The broker says while the company deserves a higher valuation to reflect its market-leading position, it cannot understand the extent of its premium to the sector, "surely not one of this scale".The broker confirms a 'sell' and target price of 535p. Broker Daniel Stewart & Co says that online betting exchange Betfair put in a mixed but credible first half performance, however it will take a concerted second half performance to meet the demanding growth in the market."Trading in the third quarter started well in sports however due to race meeting cancellations overall growth moderated in the quarter to date," says analyst Michael Campbell. "Games growth has strengthened but poker continues to show significant year-on-year declines."Additionally, the broker sees costs increasing in newly regulated markets which will make it more difficult to meet expectations.