Broker tips: British Land, Autonomy, JD Sports

16th Nov 2010 12:56

Despite trimming full year net asset value estimates KBC Peel Hunt retains a 'buy' for real estate group British Land.The property group's valuation increase in the first half was 2.6%, driven principally by office lettings with only a "modest contribution from yield compression".The 0.7 percentage point gap between the initial yield of 5.2% and the net equivalent yield of 5.9% implies "future rental growth will come through", says the broker.Estimated net asset value for the full year to March 2011 has been reduced by Peel Hunt from 553p to 544p, which assumes a second half capital growth of 1.5% as opposed to 2.5% previously.The focus for British Land in recent months, according to the broker, has been the commitment to bring forward large scale city projects, including the construction of the purpose built building for UBS, and projects on Leadenhall Street and Bishopsgate.Between British Land and rival Land Securities, "British wins on dividend" with a 5.2% yield versus Land's 4%. "However the Land Securities dividend has better cover and Land Securities has a richer development pipeline"."The British Land shares have outperformed by 3.5% on a three-month view, however we see the shares broadly moving in line going forwards", the broker says.A 'buy' recommendation is retained.Panmure Gordon increases forecasts for Autonomy after the launch of the software firm's Auminence platform, which the broker thinks has the potential to be a core revenue generator.The software developer announced Monday the launch of the Autonomy Meaning Based Healthcare platform Auminence, which is a point-of-care analysis dashboard used in data-driven diagnosis decisions."By debuting Auminence, Autonomy has an opportunity to transform healthcare diagnosis - and thereby plays to the heart of this key macro driver", says analyst George O'Connor.The group feels that short term opportunity in the UK is surrounded by uncertainty in NHS spending, and so is targeting the service to the US initially."Despite the low key launch, in our view, this offer has the potential to rank alongside eDiscovery as a core revenue generator - but, given current uncertainty in US healthcare, we have made only incremental changes to our financial model", says O'Connor.The broker has increased 2012 forecasts by around $4m per quarter which increases 2012 earnings per share from $1.299 to $1.322.The target price is raised to 1,646p from 1,636p, and a 'buy' rating is retained. Broker finnCap is holding fire on possible changes to forecasts for JD Sports Fashion until after the retailer's all-important Christmas trading period.For the four weeks to 28 August, JD reported UK and Ireland like-for-like sales growth of 2.7% providing "encouraging news", since the broker's forecasts assumed a slowdown in growth."However, the comparatives for this period are easier than those for the next couple of months which are bigger months", says analyst David Stoddart. "Hence we are inclined to stick with our existing forecasts until we see the Christmas trading update in mid-January".According to Stoddart, the sports retailer remains undervalued and appears "especially cheap" on the price earnings ratio."The company has established a reputation for beating expectations, in which regard this morning's announcement is welcome."The broker says that the reasons for the discount rating have been widely circulated, which include acquisition risk, high operational leverage and the dependence on the youth market. "However, the extent of the discount appears excessive", says Stoddart.A 'buy' is retained along with a target price of 1,065p.