UK MARKET TALK ROUNDUP: BROKERS COMMENTS

16th Jul 2010 10:02

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] 0902 GMT [Dow Jones] Panmure Gordon upgrades Enterprise Inns (ETI.LN) to hold from sell. Notes the pub company reporting season has started encouragingly, with upbeat comments on current trading from Greene King (GNK.LN), Punch Taverns (PUB.LN) and JD Wetherspoon (JDW.LN). Expects other operators to echo these comments over the following couple of weeks. "As such, and given the around 32% fall in the share price since the group's interim results, we upgrade our Enterprise Inns' recommendation from sell to hold whilst retaining our 90p price target." Shares +0.4% at 95p. ([email protected]) 0721 GMT [Dow Jones] Societe Generale initiates Michael Page (MPI.LN) at hold with 387p target and Hays (HAS.LN) at sell with 81p target. Says while recruiters of both temporary and permanent staff are reporting a strong upturn in business trends, there is a risk the uncertain macro backdrop may hold down the recovery for permanent recruiters such as Hays or Michael Page. SocGen's cautious stance on Michael Page derives purely from doubts regarding the longevity of the current upturn. Says the company's attractions are clear and cites a no-acquisitions policy aimed at returning excess cash to shareholders and a strong brand. For Hays, the brokerage's concern is its exposure to the UK and within that its reliance on the public sector. Michael Page -0.6% at 396p and Hays flat at 96p. ([email protected]) 0709 GMT [Dow Jones] Sage's (SGE.LN) promotion of its Europe and Asia boss, Guy Berruyer to the position of CEO, is a "strong appointment," and signals an unchanged strategy, Piper Jaffray says. "He brings significant experience, with a strong track record and we believe this confirms our existing view that a new CEO will not bring a change of strategy - this is positive news." Piper sees a smooth transition, with Berruyer assuming control in October and former CEO Paul Walker remaining with Sage till December. Overweight rating, 298p target. 3Q trading update due July 27. Shares flat at 242p. ([email protected]) 0651 GMT [Dow Jones] Burberry (BRBY.LN) shares are expected to rise more than 5% today following news the company has bought its Chinese retail operations for GBP70M, says a trader. Notes the move will add GBP20M to operating profit for FY '12, according to Burberry. Says this implies upgrades to FY '12 EBIT, earnings and operating margin estimates. Reckons the market will welcome the news, which will have an accretive impact on profitability and give the group more control over its distribution network in China. Shares closed Thursday at 791p. ([email protected]) 0641 GMT [Dow Jones] Sage's (SGE.LN) appointment of its European and Asia boss Guy Berruyer as its new CEO is good news, with Panmure Gordon analyst George O'Connor noting he has "international expertise, an industry background, has built an impressive business in Europe and is steeped in the Sage and the SME culture. These factors always gave him pole position in the hunt for a new CEO, in our view. We always expected an internal appointment, and Mr Berruyer was on our list with FD Paul Harrison, UK CEO Paul Stobart and North America head Sue Swenson." Says that as with the news in April of Walker's departure, "there is unlikely to be much of a share price reaction this morning." Valuation is pedestrian (P/E of 12.7x) and shares out-performed the FTSE by 4.3% in past quarter, says O'Connor, who retains a buy rating on Sage. Shares closed at 242p Thursday. ([email protected]) 0629 GMT [Dow Jones] Goldman Sachs upgrades British Land (BLND.LN) to buy from neutral and raises price target to 514p from 500p. Says this reflects the benefits of its financing position. Shares closed Thursday at 449p. ([email protected]) 0629 GMT [Dow Jones] Goldman Sachs upgrades easyJet (EXJ.LN) to buy from neutral. Thinks its returns profile merits a share price around 24% higher than it is currently. Says it has competitive strength is its flight network, and expects the company to strengthen this as short-haul operations shrink by necessity. Nudges down the price target to 515p from 520p. Shares closed on Thursday at 414.5p. ([email protected]) 0623 GMT [Dow Jones] Morgan Stanley raises Michael Page (MPI.LN) price target to 485p from 475p. Notes the company delivered gross profit performance ahead of expectations last week. In addition, says the temp staffing market industry data for 2Q has been stronger than expected in France, the US and even the Netherlands. Keeps at equalweight. Shares closed Thursday at 398p. ([email protected]) 0616 GMT [Dow Jones] Morgan Stanley raises its Premier Oil (PMO.LN) target price to 1725p from 1575p following the company's update. It notes the company's intention to accelerate the development of the Catcher well, as well as the farm-in option agreement for the Solan field and continued progress on Huntington. The bank says these all underpin a sustained ramp-up in production. Keeps the stock at overweight. Shares closed Thursday at 1446p. ([email protected]) 0613 GMT [Dow Jones] Jefferies initiates coverage of BT (BT.A.LN) at buy with a 190p price target; Cable & Wireless Communications (CWC.LN) and Cable & Wireless Worldwide (CW.LN) at hold, with 67p and 98p price targets, respectively; TalkTalk Telecom (TALK.LN) at underperform with 113p price target, and Vodafone (VOD.LN) at buy with 175p price target. Raises Virgin Media (VMED) to buy from hold. Has $25.30 price target. Says in the current environment, telecoms offer secure above-inflation dividend yields. Adds that the last two to three years witnessed coordinated price increases from UK fixed-line operators but TV/fiber will offer BT a crucial opportunity to regain retail share. Also says 'pay TV' is changing rapidly, allowing digital subscriber operators to build credible three-play bundles for the first time. ([email protected]) 0606 GMT [Dow Jones] UBS upgrades Invensys (ISYS.LN) to buy from neutral but cuts target price to 320p from 330p. Says: "20% share price underperformance versus the UK Capital Goods sector in three months, combined with the emerging upside in the Controls division, has prompted us to upgrade." Notes leading indicators in controls suggest FY '11 is shaping out to be a decent year and says this may be enough to reverse recent underperformance. However, the brokerage remains prudent and takes a 10% haircut on its Rail valuation, which accounts for the price target cut. Shares flat at 262p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 16, 2010 05:02 ET (09:02 GMT)