Broker tips: Balfour Beatty, FirstGroup, Michael Page

17th Aug 2011 12:38

Prime Markets suggests to sell FTSE 250 infrastructure group Balfour Beatty, saying that UK public sector spending cuts and a dearth of US commercial finance is weighing on visibility."Concerns over the global economy have since weighed heavily on the shares, which have now returned to 3-year lows, added to which the half year statement today provides little comfort or visibility, citing the impact of the reduction in government spending on the UK order book and delays and the lack of bank financing in US commercial markets," he said.The broker expects a retest of year-lows at 232p in the coming week or so, following by possible dips below 220p after that.While Nomura has kept hold of its current-year numbers for transport firm FirstGroup, the broker has scaled back its medium-term earnings estimates and in turn the target price, from 363p to 345p.Following the company's decision not to activate its extension period, the Great Western rail franchise is due to expire in April 2013. Capital Connect will run to September 2013. Meanwhile, the firm announced on 5 August that the Department for Trade has decided to extend the Trans Pennine Express (TPE) from January 2012 to April 2015, "less than the potential full extension period to 2017", notes Nomura."Our revised lower price target [...] now incorporate the cash outflow due on expiry of the Great Wester and Capital Connect franchises, as well as TPE ending in April 2015 and not the January 2017 that we had previously assumed."A neutral rating is maintained.UBS has slashed its target price for recruitment firm Michael Page International by 150p after its earnings in the first half came in well below expectations."The EBIT miss came from Asia Pacific and Americas. High investment in consultants, management and infrastructure dampened profit growth, with the company indicating this would continue due to the long-term attractiveness of many of these markets," the broker said."While this long-term strategy makes sense, the impact was a surprise and it suggests more limited early/mid cycle operational gearing than previously thought."The target price now stands at 400p, down from 550p, while a neutral rating is kept.BC