Broker tips: ARM, AB Foods, William Hill

27th Apr 2011 12:57

"Exceptionally strong" first quarter results from chip giant ARM Holdings have prompted Peel Hunt to upgrade the group's rating and raise its target price by over a third, saying that the period was "as good as it could have been"."The performance was strong across the board as well as being strategically important in terms of new agreements and market," leading to upgrades of at least 5%, said analyst Paul Morland."We move to 'hold', from 'sell', as the company is growing faster than we thought possible," said Morland, who has increased the target price from 420p to 575p.Nomura says that while Associated British Foods' first half results were 'in line', the second half outlook is more subdued suggesting consensus downgrades for the full year.The British Sugar and Primark owner reported first half sales of £5.21bn and earnings before interest and tax of £390m, broadly in line with Nomura's forecasts of £5.16bn and £391m, respectively.However, the company is "guiding to 2011 earnings per share (EPS) to be broadly in line with last year, which would suggest a circa 3% pullback for consensus, with the company steering to lower second half Primark margins than previously planned," the Japanese broker said.Nomura sticks with its 'buy' rating and 1,240p target price.With William Hill's first quarter update coming in stronger than expected, UBS hikes up its target price for the bookmaker by a quarter, after increasing its 2011 earnings estimates.Net revenue grew 11% in the 13 weeks ended 29 March, and the broker notes that "Management is cautiously optimistic given the ongoing risks to the UK consumer, although we believe consensus estimates continue to be conservative for 2011."As a result, UBS ups its 2011 earnings forecasts by 10% - driven by operational upgrades, as well as lower tax guidance - and raises its 2012 and 2013 estimates by 3% an 7%, respectively.A 'buy' rating is kept, and the target price now stands at 255p, from 205p previously.---bc