Broker tips: HSBC, Arriva, Clapham House

17th Dec 2009 13:06

Banking giant HSBC's balance sheet strength sets it apart from most of its UK rivals, reckons Nomura Securities, which has reiterated its 'buy' recommendation for the stock.'With a loans/deposits ratio of c80% and core tier 1 ratio of 9% as at Q3 [third quarter] 2009, HSBC remains balance sheet advantaged relative to the sector in our view, especially given the outlook for regulatory change,' opines Nomura analyst Robert Law.The broker thinks the group is set to 'see earnings upgrades from strong growth in Asia and an improving outlook for losses in its US businesses.' Apart from the US personal financial services business, Law sees upside in HSBC's commercial banking operations over the medium term 'as revenues benefit from improved volumes and margins improve when local interest rates begin to rise.'Nomura has lifted its price target for the stock to 890p.Trading at bus and train group Arriva was in line with expectations, and although Panmure Gordon concedes the shares now look cheap, the broker does not expect the shares to rebound too far in the current market environment.Panmure Gordon has retained its 500p price target and hold recommendation despite Arriva saying that cost reductions and a reversal of the circa £30m fuel cost increase seen in 2009 gave the management greater confidence of a positive medium term outlook.The decision by Gourmet Burger Kitchen chain Clapham House to stick with a very cautious new restaurant opening programme is indicative of the lack of confidence prevailing in the restaurant trade, broker Charles Stanley reckons.'Despite noises from some operators that this is the property opportunity window not to miss, CPH [Clapham House] stated that they will have no further UK openings to Mar-2010. In addition management expect a similar restaurant opening programme in the following year,' Charles Stanley analyst James Dawson noted.The broker has retained its 'hold' recommendation on Clapham House after the restaurant chain's interim results. Current trading is in line with expectations, according to management, but 'we believe that the more telling forward looking comment relates to the perpetuation of the subdued opening programme,' the broker said.The price target has been left unchanged at 68p.