Broker tips: Carnival, Tullow, JD Sports

22nd Sep 2009 12:47

Bank of America Merrill Lynch has added Carnival to its 'Europe 1' list of preferred stocks ahead of the cruise ship operator's third quarter results due out Tuesday afternoon.The cruise company has been hard hit by various issues such as the credit crunch and swine flu in the last couple of years but Merrill Lynch sees 'significant opportunities for net revenue yield improvement from current depressed levels.'The broker believes the company's shares offer 'an attractively priced way of playing a U.S.-led consumer recovery' and has set a price target of £23.90 for the shares.Nomura Securities has upgraded its net asset based valuation of Irish oil firm Tullow Oil following the oil company's recent discoveries in Sierra Leone and Uganda.Nomura now values Tullow at 1341p per share, up from 1160p previously. 'In addition, we have incorporated further potential from its West African portfolio (Sierra Leone and Liberia), which could be targeted next year following the encouraging Venus well result,' Nomura analyst Michael Alsford said.US bank Morgan Stanley is also a fan of Tullow Oil and has raised its target price to 1500p, while suggesting that if Tullow's run of luck with exploration continues with its west African prospects then a 2000p level is not out of the question.Broker Charles Stanley has initiated coverage of track suits and trainers retailer JD Sports Fashion with earnings forecasts that are about 5% ahead of market consensus.'Our different from consensus view is predicated on the success we think that will start to emerge at Bank, JD's biggest branded fashion business. We think that the stock market has yet to grasp the significant opportunity offered by Bank,' suggests investment analyst Peter Smedley.'JD should theoretically be valued at least in line with the retail sector forward P/E multiple (13x based on consensus estimates) to reflect the fact that JD has a secure, differentiated customer proposition (particularly well developed in footwear), a convincing profits growth story, and a strong financial position,' Smedley argues.The shares are not very liquid, however, due to Pentland Group holding a 57.5% shareholding. Even building in a 40% penalty for this low liquidity, 'the shares still have the potential to reach our price target of 650p,' Smedley believes.