Broker tips: G4S, Debenhams, James Fisher

16th Mar 2010 11:43

Shares in security group G4S dipped on Tuesday morning as the market focused on slowing organic revenue growth, but Panmure Gordon remains a fan of the stock.'G4S has delivered a solid set of final results some 2% ahead of our forecast at the adjusted PBT [profit before tax] level, with robust organic growth running at 4% as expected,' the broker said, adding that it would not be adjusting its 2010 earnings forecasts at present as a result of the 2009 results announcement.The stock trades on a multiple of 14 times projected earnings per share for 2011, 'and with 13% potential upside coupled with a 3% yield, the shares remain in Buy territory after what we see as a solid set of results,' the broker concluded.Holders of shares in Debenhams have had a good March in the lead-up to Tuesday's trading update from the department store group but KBC Peel Hunt thinks there is more share price appreciation to come.'While the shares have lifted in the build up to this statement, the group's 2011E PER [price/earnings ratio based on 2011 earnings estimates) of 8.4x offers long term value, in our view,' KBC analyst John Stevenson claims.KBC Peel Hunt has reiterated its 'buy' recommendation and is sticking with its 100p target price.Panmure Gordon is more circumspect, and rates the shares as no more than a 'hold', with a price target of 75p, though it acknowledges that the figures in the latest trading update were 'slightly better than we and consensus expected'.Panmure's 2011 earnings forecasts give a very similar projected price/earnings ratio (PER) to KBC Peel Hunt's (Panmure: 8.5, KBC 8.4), which Panmure Gordon analyst Jean Roche notes represents a '16-19% discount to sector peers'.Despite the PER discount, Panmure Gordon prefers to make its evaluation based on an adjusted net debt to EBITDAR [earnings before interest, tax, depreciation, amortisation and rent] ratio of 4.1x for FY2010,' and on this basis it prefers Next (price target 2299p) and Marks & Spencer (price target 405p). It's been a case of nautical metaphors ahoy since marine services group James Fisher announced full-year results on Tuesday morning, with Charles Stanley pitching in with 'specialist technical steadies the ship'.The broker thinks the group's performance was 'commendable' given the difficult markets in which it operates. 'Specialist technical division was the outstanding performer, with strong organic growth and resilient margins,' Charles Stanley analyst Peter Ashworth notes. The situation was more cloudy at the marine oil division, which 'experienced very difficult trading conditions due to lower volumes (on lower oil demand) and significantly reduced prices.'The sector is not likely to recover until there is a pick-up in global economic activity, Ashworth reckons. Fortunately, the rest of the group's reliance on the coastal tanker fleet as a cash cow has been reduced, the broker believes.Charles Stanley has reiterated its 'add' recommendation and kept its 560p price target for the stock.