Broker tips: Imagination Tech, IAG, BSkyB

22nd Jun 2011 12:13

JP Morgan Cazenove has made some changes to its forecasts for mobile phones and computer chip designer Imagination Technologies, after "strong" full-year results announced this morning.While the US investment bank increases revenue forecasts for the Technology division, it says that the overall challenges faced by the Systems business and higher level of operating expenditure (due to increased R&D costs) lead to downgrades of 5% and 4% to adjusted EPS in 2012 and 2013.As such, the target price is reduced from 600p to 570p. "We believe the shares remain attractively priced in the context of IMG's unique exposure to the handset and tablet market as evidenced by the continued strong ramp in royalties and also the potential from other IP [intellectual property]."Morgan Stanley has kept hold of its 505p target price and 'overweight' rating. Licensing revenues came in 8% ahead of its forecasts, but overall revenues came in 2% under. "Trading conditions remain difficult especially in the UK market for DAB radios [from its PURE Digital Division]."While UBS keeps its 'buy' rating on airline International Consolidated Airlines (IAG), it is "looking for the sun amongst the clouds" and cuts its target price on the stock from 320p to 290p.He says that if fuel prices stay below $120 - along with "fuel surcharge stickiness" and continued global demand - then IAG could see better-than-expected revenue versus the cost environment in the third quarter.However, "given the uncertainty surrounding the development of the cycle we take a slightly lower valuation multiple when setting our Price Target."Nomura keeps its numbers unchanged for British Sky Broadcasting (BSkyB) ahead of its full-year results next month, but warns that the satellite broadcaster's key performance indicators (KPIs) could show the impact of a tough retail environment."In our view, the pattern from previous quarters of a consistent margin increase and strong growth in revenue, profit and free cash flow will continue," the Japanese broker said.However, the broker says that it is likely that fourth quarter TV metrics will show the effects of a poor retail environment ("evidenced by poor general UK retail sales"). Nevertheless, a 'buy' rating and 1,060p target price are retained.---BC