Broker tips: Centrica, Logica, Aggreko

18th Dec 2009 13:13

Japanese broking house Nomura Securities has published a report on the outlook in 2010 for the European Utilities sector in which it identifies energy provider Centrica as one of its three top buys of the year.Centrica 'has become master of its own destiny through a combination of upstream acquisitions and a more competitive supply business,' Nomura analyst John Musk asserts, with a 'better balance between upstream and downstream assets.'Nomura now estimates 45% of the company's enterprise value is in upstream assets, 'which de-risks the P&L [profit & loss].''Margins in the supply are expected to remain robust around the 7% level and growth will come from additional customers and product bundling,' the broker believes.Nomura has a 'buy' recommendation and 340p price target on the stock.Last night's trading update from management consulting firm Accenture could lead to a re-rating for IT contracting company Logica, Merrill Lynch suggests.'The real positive for Logica from last night's Accenture results was the reiteration of its -3 to +1% FY [full year] growth target,' Merrill Lynch claims. 'If Accenture is right then numbers for Logica are too low.''We are currently using mid-cycle assumptions given that we see meaningful signs that economies will start to recover in 2010. Upside risk to our model assumption is possible as the model sensitivity to input factors is very high. The downside risk is a deterioration of the economy and increased competition from Indian offshore IT services players,' the US broker said.Merrill Lynch has a 'buy' recommendation on the stock and a price objective of 163p.Full year results from temporary power supplier Aggreko look like coming in well ahead of Panmure Gordon's projections, but the broker is sticking with its neutral stance on the stock.The broker had predicted full year pre-tax profit (PTP) of £227.4m but now concedes the actual figure is likely to be bearer £245m. It has started crunching numbers on next year's figures and provisionally expects to bump up its top of the range pre-tax profit forecast of £199.9m to around £230m, 'suggesting new eps [earnings per share] in the region of 58.5p and a target price nearer 820p as a result.'With the shares trading at around 875p the price target suggests the shares remain a 'hold' at best, the broker said.