Broker tips: BlueBay, Sinclair Pharma, SThree

16th Jul 2010 11:06

BlueBay's fourth quarter update was "disappointing" as forecasts for a full-year profit of £50m missed KBC Peel Hunt's expectations by 4% and consensus estimates by 10%.The broker had reckoned the fixed income fund manager would make £52.3m this year, up from £17.5m in 2009. But annual performance fees of £28.4m were less than the £36m KBC had predicted.At the end of June, the company had $34.3bn of assets under management (AuM), down 7% since the end of March, though that beat KBC's estimate of $33.5bn.It's now reviewing June 2011 forecasts for profit of £74.8m, but remains positive."We view the recent weakness as offering an opportunity to buy into the long-term growth of BlueBay's business as investors look towards later cycle products," the broker said.It repeats 'buy' advice and 440p target price.Sinclair Pharma leapt to a two-month high Friday after a positive trading update indicated sales for the year are slightly ahead of expectations.It said revenues for the year to 30 June 2010 exceeded £27m, better than the £26.6m Piper Jaffray had pencilled in."Flammazine sales, a key drive of both revenue and profitability in the near term, are on track. Sales are higher quality than previous years," said analysts there. They reckon the results are "particularly encouraging" given the major restructuring and cost reductions during 2009/10."The June IMS indicated that the business has moved into profitability on a monthly basis, and today's announcement gives us more confidence the strategy is right," Piper said. "However, we would not be surprised at a few lumpy quarters before the business regains solid momentum. Hence we retain our Neutral recommendation, but suggest brave investors may want to take a look."SThree goes up to 'buy' from 'hold' at Panmure Gordon ahead of the recruitment and contract placement specialist's interim results on Monday.Panmure analysts predict a drop in adjusted profit before tax to £7.6m from £11.2m last year on gross profit of £74.4m compared with £93.3m in 2009."Given the investment that has taken place to date, we expect profitability to be more H2 weighted than last year, with our H1 forecast 35% of the full-year (62% last year; 5-year average 43%)," they said."With a solid yield of 4% still on offer and good cyclical upside potential, we see this as an attractive stock to own, particularly for income investors."In June, chief executive Russell Clements told investors the current deal pipeline suggested the group is experiencing improvements across most markets.The number of permanent deals agreed in the first five months of 2010, with candidates due to start in the second half, was up over 30% year on year.