UK MARKET TALK ROUNDUP: BROKERS COMMENTS

30th Jun 2010 11:49

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] 1049 GMT [Dow Jones] UBS cuts Carpetright (CPR.LN) price target to 660p from 680p, following the company's FY results. Notes the outlook for sales recovery is weaker than previously expected. As a result, the brokerage pushes back its forecast for sales recovery 12 months and cuts it '11 EPS estimate to 34p from 41p and its '12 EPS estimate to 43.9p from 54.7p. Still, reckons the cost control measures implemented to-date and strong negotiation with suppliers will enable Carpetright to ride out the downturn by keeping prices low and winning market share. Keeps at neutral. Shares +0.2% at 642p. ([email protected]) 1014 GMT [Dow Jones] HSBC cuts Carpetright (CPR.LN) price target to 690p from 830p following the company's FY results. Carpetright's weak outlook will drag on the share price performance, says HSBC. Still, "overall, we remain optimistic on positive surprises in loan growth and margin expansion this year and thus would remain positive across most of our coverage universe." Keeps the stock at neutral. Shares +0.4% at 642p. ([email protected]) 1012 GMT [Dow Jones] Citigroup cuts Resolution (RSL.LN) price target to 87p from 121p, reflecting value dilution and deal execution risks after the company agreed to purchase part of Axa's UK life unit. Additionally, Citigroup says Axa's (CS.FR) decision to exit the UK could be a prelude to more insurers taking a closer look at their UK businesses. "Resolution offers vendors a credible exit option for such companies while providing its own shareholders with cash-based returns." Keeps at buy. Shares +6.6% at 64.3p. ([email protected]) 0956 GMT [Dow Jones] Panmure Gordon downgrades CVS Group (CVSG.LN) to hold from buy and cuts target price to 109p from 200p following the company's profit warning. "With LFLs yet to recover we now feel we are in unchartered territory and believe it will take some time for confidence to return." Brokerage awaits further developments when the company reports its FY number on September 10. Shares +2.9% at 105p. ([email protected]) 0950 GMT [Dow Jones] Costain's (COST.LN) 1H trading update is in line with expectations, says Panmure Gordon. "Clearly, there is a lot of uncertainty about where spending cuts will hit but the group's focus on clients, markets and needs is providing resilience." With an attractive valuation, particularly a 4.5% dividend yield, the brokerage retains its buy recommendation and 290p price target on the stock. Shares flat at 203p. ([email protected]) 0915 GMT [Dow Jones] Evolution Securities raises Kazakhmys (KAZ.LN) to add from sell, following the sharp correction in the company's share price, but lowers target price to 1185p from 1270p. Says this reduction reflects the decrease in the market value of the company's 26% interest in Eurasian Natural Resources Corporation (ENRC.LN), "but is mitigated somewhat by our assumption that the Kazakh tenge will remain weaker than we had initially expected for the remainder of the year." Shares -1.4% at 1018p. ([email protected]) 0913 GMT [Dow Jones] Goldman Sachs raises Berkeley Group Holdings (BKG.LN) price target to 1084p from 1050p, given the stronger pricing and higher visibility in its order book relative to its house builder peers. Goldman says the FY '10 results are ahead of expectations with pretax profit at GBP110M versus consensus expectations of GBP105M. Goldman now forecasts FY '11 EBIT of GBP118.2M from GBP98.4M previously. It expects FY '11 EPS growth of 7.1% year-on-year. Buy recommendation. Shares -1.8% at 755p.([email protected]) 0709 GMT [Dow Jones] Standard Chartered's (STAN.LN) $500M investment in Agricultural Bank of China's (601288.SH) initial public offering in Hong Kong is very much expected and was previously flagged, says an analyst. The investment follows a recent agreement between the companies to develop new business opportunities and will be financed from Standard Chartered's internal cash resources, says Shore Capital. "ABC is in the top four commercial banks in China, with the largest domestic distribution network and a strong presence in urban and county areas. The ABC IPO is expected to raise between $17B-$21B," adds Shore, maintaining its buy rating on the stock. Standard Chartered -0.2% at 1656p. ([email protected]) 0656 GMT [Dow Jones] AstraZeneca's (AZN.LN) Crestor patent victory has lifted a significant uncertainty says Shore Capital. Says while there may be little scope to upgrade consensus forecasts, thinks this removes a significant overhang from the AstraZeneca investment case. Thinks investors will now focus more on the potential of the emerging markets opportunity and that, combined with the removal of this near-term uncertainty, should provide a catalyst for a re-rating of the shares. Keeps at buy. Shares closed Tuesday at 2947p. ([email protected]) 0652 GMT [Dow Jones] Jefferies International upgrades AstraZeneca (AZN.LN) to hold from underperform and boosts target price to 2850p from 2550p. This comes after AstraZeneca prevails in its U.S. legal challenge against numerous companies that sought to market generic versions of Crestor prior to its patent expiry in 2016. The ruling was widely expected to have occurred by the end of July, says Jefferies. Adds that a positive share price reaction is to be expected given the significant overhang. However, "we expect that the generics companies will appeal the decision, which is somewhat controversial in our view and that this overhang could revisit the shares in the mid-term." Shares closed at 2947p. ([email protected]) 0643 GMT [Dow Jones] Jefferies initiates coverage of Smith & Nephew (SN.LN) at buy with 790p price target. Sees significant re-rating in the orthopedics industry and says the company is best placed for this. Says its valuation is among the most attractive in the sector and a modest acceleration in growth coupled with margin improvements should be a catalyst for a re-rating. Also notes the company's diversified revenue stream. Says the main contribution to Smith & Nephew's growth will come from endoscopy and advanced wound management, leading to 7% revenue growth in '11 versus 2% in '09. Shares closed Tuesday at 634.5p. ([email protected]) 0637 GMT [Dow Jones] The appointment by Premier Foods (PFD.LN) of Ronnie Bell as its non-executive chairman is a good move, says an analyst. Says he has extensive food experience, with 30 years at Kraft (KFT), as well as plenty of non-executive experience. Thinks he is a heavy-weight, and the company is trying hard to improve its profile. Sees this as a modest positive for the shares Wednesday, which are looking oversold of late. Shares closed in the previous session at 19.5p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 30, 2010 06:49 ET (10:49 GMT)