Broker tips: Booker, Babcock, McBride

7th Jul 2011 12:41

Singer Capital has upped its target price on Booker to 65p from 58p after a bullish update from the cash and carry group.Booker said it is on course to meet expectations for the year ending 30 March after seeing a sharp rise in sales in the first quarter. Total sales were up by 9.5% from the same period the previous year, and by 9.1% excluding tobacco. Like-for-like tobacco sales were up by 5.7%. Singer maintains its "fair value" rating on Booker. It notes that it trades on a price earnings ratio of 19.7 for calendar year 2011.Panmure Gordon said that with less than a 10% upside to its target price of 780p for engineering support firm Babcock, it has moved its recommendation from buy to hold.Nevertheless, the broker said that the first quarter interim management statement confirmed that trading remains in line with expectations, with the order book and bid pipeline progressing as planned.As such, Panmure is maintaining its estimates following the upgrades made after the full-year results in May. However, after the recent share price strength - gaining over 25% over a six-month period - the broker downgrades the group to hold.As a result of a tougher pricing environment for McBride, Peel Hunt slashed its profit forecasts for the year ending 2012.The firm - which supplies household and personal products for retailers such as Carrefour, Tesco and Metro, to sell under their own names - secured the price increases it expects in the year ending 2011, with sales and profits in line with expectations, Peel Hunt said.However, "we are reducing our FY2012E [forecasts] as we expect volumes to be lower than expected, due to the tough market conditions and as the company expects to exit non-profitable business. We have reduced our forecast for sales growth from 5% to 2%. In addition, pricing has become tougher and the company is continuing to see increases in material prices," said analyst Charles Hall. While a hold rating is maintained, the target price is lowered from 160p to 140p.RG/BC