Broker tips: Centrica, Standard Life, Aveva

15th Mar 2010 13:04

Expectations of strong growth in the UK and the US have prompted Nomura to raise its rating on British Gas owner Centrica to 370p from 340p.The broker notes that Centrica is already the largest energy provider in the UK with 16m accounts and is adding customers due to its competitive prices and an improvement in customer service.'Centrica can use this scale in energy coupled with its 9,000 plus engineers (10 times more than nearest peers) to cross sell energy and home services products and to roll out new product offerings as the UK moves towards greater energy efficiency and implements the low carbon agenda,' the broker says.Nomura also notes that earnings before interest and tax in the US are expected to double in three to five years.'Centrica hopes to mimic the successful turnaround of the UK business in the US,' the broker notes.'We are not convinced that a doubling of EBIT is possible but our forecasts here have increased.'Nomura has a 'buy' recommendation on Centrica. While not going so far as to rate the shares a 'buy', Charles Stanley thinks stock in Standard Life is worth accumulating at the right price after the life assurance giant's recent results topped expectations.'Overall these were positive results with operating profits, cash flow and the dividend all above expectations. The cost savings are ahead of target and the capital position remains robust,' Charles Stanley analyst Nic Clarke reckons.'We believe this supports our positive recommendation on the stock (Accumulate) and importantly, with strong operating capital and cash generation the yield of 6% looks to be well supported,' Clarke added.Friday's rise in the Baltic Dry index, which measures price changes in international shipping markets, has prompted Panmure Gordon to recalculate its numbers for engineering data and IT systems provider Aveva.The broker thinks that its previous assumption of a 3% revenue rise for Aveva in 2011 may be on the light side given that the Baltic Dry index rose 5.73% on Friday. Historically, 'Aveva's share has followed this index,' Panmure analyst George O'Connor asserts.As a result of a sunnier outlook on the revenue front the broker has upgraded its 2011 earnings per share estimate for Aveva from 55.6p to 58.7p. This, in turn, has prompted a change in the target price from 1142p to 1226p. The broker advocates buying the shares.