Broker tips: Aggreko, Majestic, Weir

14th Jun 2010 12:40

An exhaustive visit to nine of Aggreko's sites in Africa has not changed Panmure Gordon's mind about the company's shares, which it thinks are fairly valued by the market, though the broker was impressed with the growth prospects for the temporary power provider over the long term."In addition to underlying improvements in rates, which we believe are now coming through in a number of markets, there remains a fundamental shortage of investment into replacement and new-build power generation which should continue to leave supply requirements for temporary power short of what remains growing demand in a material number of countries," the broker said.The company remains "well placed to win more than its fair share" of contracts for high profile special projects such as the Winter Olympics or the World Cup, but with the shares currently trading on 19.4 times projected 2010 earnings per share the stock is rated no more than a "hold", with "only marginal upside to our 1458p price target".Results from Majestic Wine were ahead of expectations but FinnCap thinks the wine seller will be awaiting next week's UK Budget with a degree of trepidation.The company has had some success selling more fine wines - like for like (LFL) sales growth in this area was 22.7% year on year compared to LFL growth of 8.4% overall - but the broker things "the 'trading up' into fine wines would appear to be threatened by the upcoming 'austerity' Budget - Majestic's customers appear to be in the firing line."On the plus side the company should continue to derive better than average LFL sales growth from its online business, FinnCap suggests, while "the encouraging start to the year should allow forecast upgrades today.""The shares already enjoy a premium rating, reflecting the strength of the company's trading model and its balance sheet. It seems likely that the current trading statement will underpin that in the short term," FinnCap concludes.Engineering group Weir was the best performing FTSE 250 stock on Monday morning after trading in the nine weeks to 4 June exceeded expectation.Broker KBC Peel Hunt has reiterated its "buy" recommendation on the stock, saying: "After market demand remains strong and continues while original equipment orders are beginning to improve."Weir said first half pre-tax profit is now expected to be around £140m, while over the full year it should be somewhere in the range of £250m to £260m. KBC Peel Hunt had originally been forecasting pre-tax profit of £220m for the current year.