Broker tips: Blacks Leisure, Alumasc, Experian

15th Jul 2011 14:49

The future is black for Black's Leisure, judging by finnCap's latest diagnosis of the outdoor clothing and equipment retailer's health.It has slashed its target price on Black's to 1p from 10p, following the company's announcement this morning that it is extending its bank facility to £40m as it battles against challenging retail market conditions."It is now hard to see where any equity value might lie," says finnCap in response to the announcement.The broker also notes that the company's plans to exit its boardwear business seem to be behind schedule, with five shops not yet exited.Unsurprisingly, finnCap keeps its "sell" rating on Black's.Building and engineering products company Alumasc fell by around one-seventh on the morning it warned that the final quarter of its financial year has experienced a deterioration in margins, putting the final dividend in doubt. Not surprisingly, finnCap is putting its forecasts under review. "We downgraded our rating on Alumasc from Buy to Hold in April, with a price target of 165p; on lower forecasts, we feel a more appropriate level likely to be around 120p," the broker said. "The shares will suffer today on this disappointing statement, which appears at odds with the majority of recent trading updates," it added. Peel Hunt is keeping the faith, however. "Slower growth is now expected in precision components and building products in fiscal 2012, but we are still forecasting progress for the group," Peel Hunt analyst Robin Hardy said. "Fiscal 2011 has suffered a hit on costs at Gatic [the manhole covers division], and we are lowering forecasts for both periods. The dividend, while uncovered in fiscal 2011, is still cash-fundable," Hardy noted. The broker is sticking by its forecast of a 10p full-year dividend.The market regarded the trading update from credit checking firm Experian as lacklustre, but Barclays Capital (BarCap) welcomed "Experian's steady business performance." BarCap expects the group to "sustain a broadly solid credit profile" for the remainder of the current financial year, and highlights the ever-present possibility of more bolt-on acquisitions before the year is out. "We note positively that management does not plan to restart any further share buyback programme. We view its focus on investing in growth within the context of maintain a strong investment grade rating, as broadly reassuring," the investment bank added. "On balance, we continue to like the Experian cash bonds. In CDS [certificates of deposit], we recommend buying protection, albeit this is largely on valuation grounds," Barcap concluded.The market regarded the trading update from credit checking firm Experian as lacklustre, but Barclays Capital (BarCap) welcomed "Experian's steady business performance."BarCap expects the group to "sustain a broadly solid credit profile" for the remainder of the current financial year, and highlights the ever-present possibility of more bolt-on acquisitions before the year is out."We note positively that management does not plan to restart any further share buyback programme. We view its focus on investing in growth within the context of maintain a strong investment grade rating, as broadly reassuring," the investment bank added. "On balance, we continue to like the Experian cash bonds. In CDS [certificates of deposit], we recommend buying protection, albeit this is largely on valuation grounds," Barcap concluded.