Broker tips: Admiral, ARM, Punch

24th Aug 2011 12:44

Despite the tumble in Admiral's share price on Wednesday, Nomura has reiterated its positive stance on the stock, saying that headline results from the car insurer came in more or less in line."The highlight is strong group policy growth of 33% in the first half, where first quarter momentum has been carried forward," said Nomura.However, the market on Wednesday seemed to focus on Admiral's combined ratio (which measures how well the underwriting operations are doing - a lower number is better) which rose to 94.2%, from 89.3% in the first half of 2010. As such, shares were 8.86% under at 12.41. Nevertheless, Nomura says that the investment case - "predicated on continued earnings growth" - remains sound and keeps its buy rating and 2,000p target price.Chip designer ARM Holdings was given a boost on Wednesday on speculation that Apple's new iPhone 5 could boost outlook, according to Merchant Securities.While there is speculation that ARM could deploy its Core processors in the move into 'ultrabooks' and laptops, there are now rumours that as well as the iPhone 5 launching in October, there may also be a cut-price version of the current iPhone 4, the broker notes. "Clearly this would be a boost to volume and raise the outlook," Tolley said.A buy rating and 580p target price are confirmed.Panmure Gordon has slashed its target price for Punch Taverns by 42% from 19p to just 11p, given the economic uncertainty and the disposal of its non-core pubs.On a pro-forma basis (reflecting the demerger of the Spirit business which occurred at the start of August), Panmure expects the company to make £78m in pre-tax profit during the year ending 21 August 2011 and thinks that this will drop to £58m the year after, "mainly reflecting the disposal c500 non-core pubs and a slight increase in the interest charge to 6.9%," said analysts Simon French and Lindsey Kerrigan.The broker also highlights a double-dip recession in the UK and legislation against the tied pub model as key risks going forward.A hold rating is retained.BC