Broker tips: Experian, IMI, Morrison

9th May 2013 12:31

Credit checking giant Experian delivered full-year results in line with expectations as sales grew across all its global markets. However, analysts at Canaccord Genuity said the company's stock is "expensive and increasingly risky", recommending a 'sell' rating and target price of 898p.The broker also said group organic revenue growth has slowed, reflecting its performance in Latin America where revenue has fell by nine percentage points to 14% in the year. Brazil accounts for 90% of the result."The Brazilian business is 60% consumer facing and transaction based," Canaccord explained."Here, recent data points have not reassured. Inflation is elevated. Consumer non-performing loan rates are rising. Consumer confidence is weak, reaching a three-year low in April and retail sales growth data was down year-on-year." The broker said given the soft economic background it sees risk to double-digit growth organic revenue growth estimates for Latin American falling."We expect that Brazilian economic news flow, particularly consumer credit growth, unemployment rates, job vacancies, hours worked and consumer credit default rates will act as a driver for shares," the broker added.Jefferies International analysts said IMI remains a "good, well managed business" despite a slow start to the year for the engineering company."IMI has reported its first quarter interim management statement (covering trading for the 1st 4m of the year) that is, in our view, a solid update," Jefferies added to the above. "Indeed, we feared it might have been a touch softer, hence we are comforted in that respect. Year to date sales are slightly down year-on-year (in-line with management's expectations) and, as we have seen across the industrial sector, there is a working assumption that the second half activity picks up. IMI remains a good, well managed business."The broker issued a 'hold' rating and target price of 1,405p. Analysts at Jefferies International recommended a 'buy' rating and target price of 310p for Morrison Supermarket after the UK grocer posted first quarter sales that beat market forecasts.Morrison was a top faller on the FTSE 100 Thursday as the supermarket chain revealed a 1.8% drop in like-for-like sales, excluding fuel, in the 13 weeks to May 5th. It exceeded predictions for a 2.0% decline and was up on the previous quarter's 4.1% decline. "Notwithstanding the lack of scale in convenience/online food, we see scope for further progress as the group continues to improve on marketing/trading execution (particularly once we cycle a further weakening in comps at the end of the summer)," Jefferies remarked in a research note."This should further support Morrison at a time when it still trades at an ample sector discount."The prospects of further improvement in like-for-like performance will likely be the key driver for shares in the immediate term, the broker went on to say. It ended by pointing out how the new online store should also unlock new levels of productivity savings.RD