Broker tips: BATS, Pharma, Wincanton

16th Aug 2011 12:59

Nomura has raised its estimates for cigarette giant British American Tobacco, as a result of a strong first half performance and a positive second half pricing outlook. "Estimate increases are driven by encouraging first half organic performance (even ex Japan) and a positive pricing outlook going into the second half supported by additional price increases in Russia and Brazil, premiumisation and increased volumes in Japan," analysts said. A buy rating is maintained. Matrix has highlighted the effect that the patent infringement case won by US pharmaceutical group Pfizer will have on its London-listed peers, GlaxoSmithKline, AstraZeneca and Shire. "Yesterday, Pfizer announced it had prevailed in its patent infringement action against generics company Teva Pharmaceuticals to protect a ?method-of-use? patent for one of its blockbuster drugs, Viagra," Matrix notes. "This is a positive precedent for other existing method of use patents as well as future method of use patents, providing an addition hurdle for generics, thereby justifying a re-rating in the pharmaceutical sector given the heavy reliance on such patents," Matrix said.The broker thinks that this will be positive for pharma stocks GlaxoSmithKline (buy with target price of 1,418p), AstraZeneca (reduce with target price of 2,806p) and Shire (buy with target of 1,951p). Singer Capital Markets has kept its buy rating on aviation services and newspaper distribution group John Menzies following the firm's interim results. "This should be the first year that Aviation exceeds Distribution in terms of contribution as market growth and market share gains continue to boost revenue and profit. Distribution continues to be weak as expected, though the prospect of a News of the World replacement remains likely," said analyst Andy Murphy. Singer said that its target price of 632p implies a forward earnings multiple of 8.9, below the long-term average of 10.5. BC