Broker tips: Burberry, Admiral, Cookson

3rd Oct 2011 12:56

Nomura has kept its neutral rating on British luxury brand Burberry ahead of the group's first half trading update on 12 October.The broker expects Burberry to report 29% constant currency sales growth to £820m, but forecasts a 50 basis point decline in the first half earnings before interest and tax margin in the key retail/wholesale division, due to operating costs (including investment in flagships, customer services and share schemes).Despite keeping its neutral rating, the broker said that given the recent pullback in the shares, the stock offers some upside to its 1,356p target price.Investec has maintained its sell rating and 843p target price on FTSE 100 motor insurer Admiral, highlighting continuing pressures from the Association of British Insurers (ABI).Analyst Kevin Ryan said, "Following ABI's victory in getting the Ministry of Justice to announce it will ban referral fees, it is now believed to be pushing to reduce lawyers' fees in all personal injury cases.""We see a steady squeeze on Admiral's superior profits continuing and reiterate oursell recommendation," Ryan added.UBS has upgraded its rating on materials science firm Cookson from sell to neutral, saying "the valuation has dropped to a point where it is difficult to point to much more downside."The broker says its 20% below consensus estimates yield a price-to-earnings ratio of seven, which is cheap but "not yet thoroughly compelling to merit an even more positive view."Upside to the share price will be limited by a string of negative catalysts in the coming months, including steel mill idling and a correction in Electronics, UBS said. A 430p target price is kept.BC