Broker tips: AstraZeneca, Standard Chartered, CSR

12th Dec 2011 12:32

Analysts at Credit Suisse have issued a rather downbeat research note on pharmaceutical giant AstraZeneca this morning. While they believe that the company's share price already reflects "the material patent expiry burden facing AstraZeneca," they are not so sure that the same can be said of the possible impact that the loss of the drug Seroquel will have on its gross margins, of what the success of the Brilinta launch may be or what growth in emerging markets may be like. In particular, these analysts emphasise that they expect the company to cut spending on research and development in 2012, "in an effort to offset the loss of high margin sales." However, if the company is to remain a pure Pharma business then, in their opinion, material further cuts to R&D "are not feasible." Credit Suisse reiterates underperform and its 2,600p price target. Investec has cut its targets for emerging markets-focused bank Standard Chartered and reiterated its hold rating on the stock following its pre-close trading update published last week. "The pre-close statement last week was a mixed bag. Consumer and client flows in Wholesale showed double-digit growth, with non-client income growth in Wholesale slowing," said analyst Arun Melmane. The broker says that while Standard Chartered will probably reach consensus estimates for pre-tax profit this year "as impairments continue to be low", forward consensus is slightly too bullish "given a possible slowdown in Asia and impairments currently at cyclical lows". The target price is scaled back from 1,650p to 1,550p. Prime Markets has given wireless technology and computer chip company CSR a 'speculative buy' rating after the firm's new strategy announced on Monday. Prime Markets' head of dealing Richard Curr said: "Today's announcement, while an admission of a failure in strategy to penetrate markets dominated by MediaTek and MStar, also offers the promise of potential recovery from the change in strategy." The broker notes that shares have seen an almost uninterrupted fall from the 52-week high of 447p reached in February to just 166.8p on Friday's close.. The broker now expects the stock to test the falling 50-day moving average of 177p in the next five days, followed by a test of the 100-day moving average of 206p in the next few weeks. BC