Broker tips: Carphone Warehouse, Thomas Cook, Informa

30th Nov 2009 13:27

Carphone Warehouse pleased the market with better than expected interims last week but Nomura Securities was irked that the company did not provide an update to guidance on expected savings from its Tiscali purchase.The broker is tipping that the company will upgrade by one-third current guidelines of £40m - £50m of savings from the integration of Internet service provider (ISP) Tiscali into the company's TalkTalk broadband arm.Encouragingly, Carphone Warehouse did 'confirm that the broadband pricing environment was improving, big-box roll-out was on track and that the demerger is scheduled for end of March 2010.'All four events could lead to increase demand for the shares and accordingly the company has lifted its target price from 240p to 245p, while retaining its 'buy' recommendation.Travel operator Thomas Cook's full year results were ahead of expectations but broker Killik & Co still would not buy the shares, even though they look cheap.'The stock is not expensive at present,' notes Killik's head of Equities, Jonathan Jackson. The shares trade on 8.4 times consensus earnings per share for the year to September 2010.Jackson also observes that the group is likely to enjoy a reduction in fuel prices next year and will benefit from the elimination of competition such as XL Leisure Group.'However, we believe 2010 will be a difficult year for the consumer, with higher taxes and concerns over unemployment impacting levels of discretionary spending,' Jackson said. The FIFA World Cup also likely to prove a disruptive influence, 'we think the environment for the industry will remain tough,' the broker concludes.Panmure Gordon disagrees with the bearish view, however, and recommends buying the shares 'given the compelling valuation and attractive risk/reward profile.' It has a 310p price target.Uncertainty seems to be the watchword at business publisher Informa which, as well as being involved in talks to buy German publisher Springer, also has sizeable interests in Dubai.The broker retains its 'buy' recommendation of the shares, having turned bullish on the stock when Informa bolstered its balance sheet with a £240m rights issue in May. Part of the investment case was that Informa itself would become a viable takeover target, but the acquisition of Springer would wreck the thesis, Panmure asserts.'If INF [Informa] walks away from Springer, the shares should rebound sharply for two reasons: 1) The current multiple is low, and the original investment case is restored; and 2) There is some evidence of mid-large cap private equity coming back, and INF will be a target with previous approaches all well north of the current share price,' Panmure analsy Alex DeGroote believes.