Broker tips: Home Retail, Premier Farnell, Evolution

9th Sep 2011 12:33

Singer Capital Markets has slashed its target price for FTSE 250 retailer Home Retail Group by 29%, after the group's first half results showed continued tough trading at Argos and a challenging second quarter for Homebase."Whilst not as bad as feared the continued weakness of trade at Argos and our concerns about exposure to an increasingly cash strapped consumer prompts us to downgrade estimates by 12% in the current year and by 18% next year," the broker said.As such, the target price is cut from 133p to 95p and the broker maintains its sell rating, saying that it remains cautious on earnings prospects "given the group's exposure to the UK mass market customer, the continuing squeeze on spending and competition."Panmure Gordon has reiterated its sell recommendation on electronic components supplier Premier Farnell following the group's first half results on Thursday which showed that it struggled to replicate the eye-catching growth it enjoyed the year before."Management remains focused on delivering its strategic objectives while controlling costs but trading conditions remain tough. The group has limited revenue visibility and global PMI data has been softening. We bring back our earnings forecasts to reflect this uncertainty," said analyst Andy Brown.The broker is targeting a dividend yield of 7%, which equates to a new target price of 150p, down from 200p previously.Following Investec's recommended offer for Evolution, Peel Hunt has raised its target price on the investment banking and stockbroking firm from 86p to 100p to reflect the offer price.Investec said that it has reached an agreement with Evolution's board on terms of a recommended share offer, valuing the business at £233.2m, or 100.24p per share."Our range of suggested values was 86p to 117p, with 100p broadly in the middle looking like a fair offer given prevailing market conditions (albeit some investors may be disappointed by the lack of a cash offer)," the broker said.Peel Hunt keeps its hold rating on the stock.BC