UK MARKET TALK ROUNDUP: BROKERS COMMENTS

14th Jul 2010 07:51

Broker comments in the UK today. Compiled by Dow Jones Newswires Markets Desk, [email protected] Contact us in London. +44-20-7842-9464 [email protected] 0651 GMT [Dow Jones] Barratt Developments' (BDEV.LN) FY results are broadly in line with expectations, says Shore Capital. Notes debt has fallen to GBP375M, but says this largely reflects deferred land payments. Maintains sell recommendation on the stock. Shares closed Tuesday at 105p. ([email protected]) 0650 GMT [Dow Jones] London Stock Exchange (LSE.LN) beats consensus estimates by 2.15% with GBP166M in first fiscal quarter income. And "most importantly, the LSE is beating expectations in post-trade services - an area the LSE has singled out for growth," says Arden Partners analyst Sarah Spikes. Spikes says June figures give confidence that the LSE is regaining market share. She keeps a buy rating and 1000p target. Shares closed Tuesday at 605p. ([email protected]) 0645 GMT [Dow Jones] Ashmore Group's (ASHM.LN) 4Q interim management statement shows assets under management ahead of expectations says KBC Peel Hunt. Says this is driven by inflows of $2.9Bln, well ahead of the $0.7Bln the brokerage was expecting. Says the performance fees for the year are estimated to be GBP82.9M, compared to the GBP57M KBC was looking for, as a result of strong fund performance. Expects the shares to react positively to the statement. Shares closed Tuesday at 264p. KBC has the stock at buy with a 305p price target. ([email protected]) 0640 GMT [Dow Jones] JD Wetherspoon's (JDW.LN) 4Q sales show improvement on the previous quarter says Investec. Breakfast openings and good weather are believed to be the main factors behind this. The company is on track to deliver on full-year estimates, says Investec. However it's concerned that a number of brokerages continue to forecast a substantial pick-up in profits next year. Investec says this is in contrast with management's commentary and there is a risk of disappointment. Notwithstanding this, Investec says Wetherspoon appears on track to meet the brokerage's expectations. Buy rating, 590p target. Shares closed Tuesday at 437.7p.([email protected]) 0638 GMT [Dow Jones] Goldman Sachs upgrades JD Wetherspoon (JDW.LN) to neutral from sell, saying the risk-reward is now more balanced. Notes the share price has traded down and is now in line with the brokerage's 6-month price target of 410p. "We believe JD Wetherspoon's value price points and planned estate growth leave it well positioned in a subsector in which we expect limited growth over the next year." However, continues to see greater potential upside elsewhere in its transport, travel and leisure coverage. Shares closed Tuesday at 438p. ([email protected]) 0635 GMT [Dow Jones] Royal Bank of Scotland initiates coverage of Thomas Cook Group (TCG.LN) at buy with 270p price target. Says the stock has underperformed significantly this year on concerns over summer trading and future growth prospects. Says: "We believe market concerns about the death of the package holiday are overdone." But the brokerage thinks the business has performed exceptionally well in very tricky markets and is well placed for the future. Says Thomas Cook is still reducing costs, in particular in airline and accommodation procurement, where it has restructured and increased its in-resort resources. Shares closed Tuesday at 198p. ([email protected]) 0628 GMT [Dow Jones] Fresnillo (FRES.LN) second quarter output is "broadly in line with expectations," says Cailey Barker of Numis. He notes that attributable silver production of 9.62 million troy ounces was broadly in line with his expectations of 9.7 million ounces while attributable gold production of 91,254 troy ounces was "slightly better than expected," he adds. The "project profile remains intact" and the company continues to work on reducing costs. Numis has an add and 1230p target price on Fresnillo. Shares closed Tuesday +2.3% at 1097p. ([email protected]) 0624 GMT [Dow Jones] Royal Bank of Scotland initiates coverage of TUI Travel (TT.LN) at buy with 300p price target. Says: "We believe this stock will fare well even in tricky economic conditions, with a proven management team still extracting internal profit opportunities." Says TUI has performed exceptionally well in very difficult circumstances and the full benefits of consolidation are yet to be seen. TUI still has some major projects in progress to improve the profitability of its business, in particular, turning around loss-making businesses in France, Poland and Ireland. Adds the market concerns about the death of the package holiday are overdone. Shares closed Tuesday at 230p. ([email protected]) 0619 GMT [Dow Jones] Royal Bank of Scotland initiates coverage of TalkTalk Telecom Group (TALK.LN) at buy with 160p price target. Says: "We forecast 8%-9% per annum Ebitda and EPS growth over the next three years as the group delivers synergies and improves gross margin, due to the continuing subscriber base migration on to its own network." Says, at the current price, TalkTalk is trading at a premium to the larger European telecom operators, but offers significantly higher growth potential than the sector. Shares closed Tuesday at 120p. ([email protected]) 0618 GMT [Dow Jones] UBS downgrades Pennon Group (PNN.LN) to neutral from buy following a period of outperformance. Year-to-date, Pennon has given a total return of 10%, outperforming the FTSE 100 and the sector by 10% and 21% respectively, notes UBS. In general, with inflation rebounding, credit conditions improving and regulatory visibility to '15, UBS sees all the UK water stocks as potential M&A targets. However, excluding M&A, it sees little fundamental upside in Pennon. Maintains 565p price target. Shares closed Tuesday at 582.5p. ([email protected]) 0618 GMT [Dow Jones] Citigroup initiates Compass Group (CPG.LN) at buy with 630p target. Says the shares are up by 15% in 2010 on strong trading momentum but at the same time are at about a 7%-8% discount to its historical P/E average. Says Compass' cost-saving program has delivered over 200bps of margin expansion over three years to 6.5% in FY '09. Notes that another 200bps of margin improvement to 8.5% is flagged over the longer term and early execution would lead to tangible EPS upgrades. Shares closed Tuesday at 553p. ([email protected]) 0617 GMT [Dow Jones] HSBC upgrades Game Group (GMG.LN) to neutral from underweight on valuation grounds. Says: "Recent share price performance suggests market pessimism over risk to FY out-turn is factored into the price." Has 75p price target on the stock. Shares closed Tuesday at 68p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 14, 2010 02:51 ET (06:51 GMT)