Broker tips: Domino's Pizza, SThree, Next

20th Jul 2009 12:53

Domino's Pizza may have seen sales growth slow and reduced the number of new store openings, but Charles Stanley thinks the pizza delivery group is still in strong shape after this morning's trading update.The broker, which keeps its 'buy' rating and 305p price target on Domino's, says: "Earnings expectations are likely to drift up given the confident statement from management that the group is likely to exceed market expectations for the full year."Charles Stanley's current pre-tax profit estimates for Domino's in 2009 and 2010 sit at £26.5m and £29.5m respectively, but it is placing these under review in light of Domino's bullishness today. It expects them to climb by 3% and 2% respectively.A 'satisfactory performance in tough conditions' has prompted KBC Peel Hunt to maintain its 'buy' rating on the recruiter SThree.While revenues and profits have been falling at SThree, the firm said its restructuring activities had left it well placed to ride out the downturn and benefit from the recovery when it arrives and maintained its interim dividend at 4p."The company is now "right-sized", the international divisions are performing well and the cash position is strong (£43.9m), allowing the company to invest in growth for the upturn," commented KBC Peel Hunt.It also maintains its 220p price target on SThree.Broker Nomura lifts its target price on Next as it thinks fashion retailer will benefit from recent sunny weather and an improvement in consumer sentiment.Next's current guidance is that second quarter sales will fall by 4% to 7%, but Nomura thinks they will be down by just 3%."While medium-term growth risks are clear, we believe this momentum is likely to continue to support a stock trading at a discount to the sector," it said.It now has a 1,780p target price on Next.