Broker tips: BSkyB, Autonomy, Pearson

26th Oct 2009 13:29

Pay TV company BSkyB 'remains one of the most attractive stocks in the media sector,' according to Nomura Securities, but it is becoming increasingly harder for the company to surprise the market with its strong performance.The broker said that the company's profits and key performance indicators announced last week were 'impressive' but the market is now tuned in to BSkyB's resilience in the downturn.Meanwhile, the impending final ruling from industry watchdog OFCOM on the pay-TV review, due in January 2010, hangs over the company.Focus is also on the price/earnings multiple of the stock, Nomura adds, though it believes 'the multiple is actually relatively attractive relative to the prospective c.20% EPS [earnings per share] growth rate and the strong organic growth.''The OFCOM ruling presents more of a challenge, but we foresee interest in BSkyB building once there is greater certainty on this issue,' the broker concludes.Nomura rates the stock a 'buy' and has a price target of 645p. Data search and interpretative software specialist Autonomy has seen its shares dive 10% over the last week after third quarter results that underwhelmed a demanding market, but Killik thinks the share price weakness represents a buying opportunity.'Going forward, we believe organic growth of 15% to 20% p.a. is achievable, irrespective of the wider economy,' predicts Killik's head of equities, Jonathan Jackson. 'In an environment where economic growth is likely to remain subdued, this will prove all the more attractive.'The broker has initiated coverage on Autonomy with a 'buy' recommendation, though it warns that the shares are likely to remain volatile in the short term. Panmure Gordon has revised its earnings forecasts for publishing group Pearson on the back of last week's trading statement but continues to see more attractive stocks elsewhere in the sector.Following FT-publisher Pearson's 9-months results Panmure Gordon has upgraded its earnings per share forecasts for the years spanning 2009 - 2011 by 5% - 7%, representing the broker's second upgrade in a row in the wake of a Pearson trading update.Even with the revised estimates, Pearson is on a projected price/earnings ratio for 2010 of 12.5. 'On valuation grounds, we therefore prefer the likes of UBM, Informa and Reed to Pearson. These names trade on lower multiples, have roughly equivalent yields and more scope for earnings surprises.'The broker has raised its price target for Pearson from 750p to 850p.