UK MARKET TALK ROUNDUP: BROKERS COMMENTS

23rd Jul 2010 07:52

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] 0652 GMT [Dow Jones] Beazley's (BEZ.LN) interim results are strong says KBC Peel Hunt with EPS of $0.18 well ahead of the brokerage's and consensus expectations. Says total pretax profit of $115.5M is boosted by an excellent reserving performance. Says the group's Chilean and Deepwater Horizon losses remain unchanged. KBC's forecasts remain unchanged. Says the shares now trade at a 1% premium to '10 net tangible assets of 121p and yield 6.3%. Keeps at buy with 161p price target. Shares closed on Thursday at 122p. ([email protected]) 0646 GMT [Dow Jones] JPMorgan Cazenove lowers Logica (LOG.LN) to underweight from neutral. Says this comes in the face of possible reductions in public sector spending (32% of group revenues and 62% of UK revenues), "as well as the company's potentially insufficient offshore resources to make them price competitive in commercial outsourcing bids." Brokerage adds that: "We are concerned that the company may reduce guidance at its 1H results on August 6." Has a 95p target price. Shares closed at 106p. ([email protected]) 0636 GMT [Dow Jones] JPMorgan Cazenove upgrades Aegis Group (AGS.LN) to overweight from neutral, and raises its target price to 148p from 137p. Says the company offers investors a unique opportunity to participate in an advertising agency restructuring story. "We also see limited risk of kitchen-sinking by the new CEO who is an internal promotion after the restructuring achieved by the current chairman," adds JPMorgan. Shares closed at 114p. ([email protected]) 0635 GMT [Dow Jones] Morgan Stanley raises United Utilities Group (UU.LN) to overweight from equalweight, and boosts its target price to 595p from 570p. Keeps fellow water company Severn Trent (SVT.LN) at overweight, noting it regards having both companies at overweight as the best way to play the theme of low risk equity regulatory asset base [RAB] growth and robust dividends driving attractive total returns in uncertain times. "We see the best total returns for these names (12% per annum for United Utilities and 13% per annum for Severn Trent on average for the 2010-15 new regulatory period) coupled with low relative valuations," it adds. United Utilities shares closed at 564p, while Severn Trent shares closed at 1276p. ([email protected]) 0627 GMT [Dow Jones] Vodafone Group's (VOD.LN) results are better than expected, the group returning to organic growth, says Mandeep Singh at Berenberg Bank's specialist sales, telecoms team. Says data revenue growth is accelerating, free cashflow is very strong in the quarter and full-year guidance is re-affirmed. Notes though that India and Turkey largely drive the beat in revenue, while Europe is in line overall. Expects the shares to start slightly higher, but thinks a better result in Europe would have driven a stronger share price move. Has a buy view with 170p price target. Shares closed Thursday at 149p. ([email protected]) 0626 GMT [Dow Jones] Morgan Stanley raises Millennium & Copthorne (MLC.LN) to equalweight from underweight and target to 480p from 440p. Brokerage makes the call ahead of the company's 2Q results due August 5, as it believes recent weaker share price performance fails to reflect that trading in key cities continues to improve, currencies are moving in its favor, and the proposed disposal of the Singapore shopping centre suggests that its attitude to low-return assets is changing. "We increase forecasts by circa 10% and while momentum is good, a low-return business that is relatively fully valued keeps us at equalweight," it adds. Shares closed at 468p Thursday. ([email protected]) 0622 GMT [Dow Jones] Liberum Capital cuts Kingfisher (KGF.LN) to neutral from buy and its target price to 240p from 275p. The broker said it fears that the company's UK project spend will continue to weaken over the next 12 months and that this could be reflected in other markets. "We see evidence of this in our consumer survey data on home improvements, willingness to move and UK planning applications," it said. Shares closed Thursday at 225p. ([email protected]) 0609 GMT [Dow Jones] Citigroup lowers Lonmin (LMI.LN) target price to 1925p from 2100p "based on 1.5x our 1283p net present value." Brokerage keeps a buy rating on the stock, noting that a year ago, the big concern was Lonmin's mining side of the business, given the previous challenges with mechanization. "Since then, Lonmin's mining performance has steadily improved and we believe management now has credibility and believability when they talk positively about future mining trends," says Citigroup. Shares closed at 1495p. ([email protected]) 0606 GMT [Dow Jones] Deutsche Bank initiates Carillion (CLLN.LN) at buy with 393p target. Says in response to the UK Government's 30% cut to capital expenditure by the end of the current parliament, Carillion is phasing down its UK construction revenues by GBP600M over the next three years. Expects a hiatus in new public-private partnerships projects in the near term. These pressures on UK construction and PPP have been factored into Deutsche Bank's forecasts. Sees medium-term growth in areas such as Canadian PPP and Middle East construction. Carillion shares closed Thursday at 319p. ([email protected]) 0600 GMT [Dow Jones] Charles Stanley initiates its coverage of Mothercare (MTC.LN), with a hold rating and a 500p price target. Says Mothercare has a reputation as one of the best long-term investment stories in the UK general retail sector. However, says the recent increasing uncertainty surrounding trading at the UK business deters it from being more constructive on the stock, for now. Says recent trading statements show how dependent group profitability still is on Mothercare's highly operationally geared UK business. Therefore, short-term uncertainty with regards the UK outweighs the long-term attractions. Shares closed Thursday at 526p.([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 23, 2010 02:52 ET (06:52 GMT)