Broker tips: CPP, National Grid, Alterian

4th Apr 2011 12:51

UBS downgrades identity theft and credit card insurer CPP and more than halves the target price following the FSA investigation.The group announced last week that the Financial Services Administration (FSA) had raised sales-related issues with its identity protection products, reducing profits in 2011."With the noise around the FSA investigation, our primary concern remains what impact this will have on the business partners. If the noise is too much, there is a risk it could cause some to pull back from CPP in our view," said analyst Alex Hugh.Given the uncertainties, the broker moves its rating from 'buy' to 'neutral' and cuts the target from 350p to 160p.RBS upgrades power and gas grid operator National Grid to a 'hold', from 'sell', now that Ofgem has sweetened its initial approach to price regulation.The broker originally identified £650m of cashflow at risk from the 'RIIO' (performance-based model) UK price controls, but it notes that Ofgem's latest 'Decision on Strategy' proposal makes half of this amount safe.With now only a 10% hit to operating profit, the broker ups its target price from 500p to 500p.Marketing software provider Alterian issued a profit warning on Monday, causing Peel Hunt to chop its forecasts by 50% and downgrade its recommendation.The broker now gives the group a 'sell' rating, from 'buy', after it announced that a single large contract deferral which meant that revenues would be 10% under expectations. Chief executive David Eldridge also resigned as a result of the miss.Peel Hunt has now cut its pre-tax profit estimate for the year ended 31 March to £4m, from £8.5m.The target price is cut to 160p, from 200p.BC