Broker tips: IG Group, Playtech, Yell Group...

20th Jul 2011 12:40

Credit Suisse keeps its outperform rating on spread-betting firm IG Group (IGG), but slightly cuts the target price after factoring in lower growth estimates.The company said it generated £320m of revenue and £163m in pre-tax profit in the year ended 30 May, after accounting for a charge of £2.5m on the closure of the sports business, extrabet.Due to a combination of lower revenue growth estimates (7%), the exclusion of extrabet and broadly constant earnings margins, the Swiss broker cuts its pre-tax profit forecasts for the year ending May 2012 by 4.8% to £175.2m. Earnings per share estimates are cut by 4.1% to 35.1p.As such, the target price falls to 530p, from 550p.Good trading momentum and strategic progress at Playtech has led Peel Hunt to raise its rating on the online gaming software developer from hold to buy."Playtech remains a unique opportunity in the online gaming sector and, whilst there are some challenges, its business model continues to look sound in a more heavily regulated industry. The discount reflects some concern over a number of corporate issues, all of which are addressable," said analyst Nick Batram.Peel Hunt places its target price of 356p under review.Prime Markets says its 'Groundhog Day' for shareholders at Yell Group and reiterated its sell recommendation and 3.58p target price following the Yellow Pages publisher's statement on Wednesday. "The Prime Markets stance on Yell has long been bearish - we published sell notes in February and May 2011, with shares falling in line with expectations. Today's interim management statement is yet another Groundhog Day for Yell shareholders", said head of dealing Richard Curr.Yell said that trading was in line during the quarter ended 30 June, with revenues falling 11%. The company also said that its plan to transform itself into a predominantly online business (through a series of deals, including a partnership with Microsoft) will not return it to revenue and profit growth until 2015.BC