Broker tips: IMI, Shire, United Utilities

3rd May 2011 12:20

The current year is shaping up to be a "great year" for engineer IMI, according to UBS, which has raised its target price on the stock by a quarter.UBS notes that the group is seeing its best growth since the early 1990s, and - "assuming that IMI can tag along with its competitors" who have shown no letup in momentum in the first quarter - the broker ups its 2011 growth rate estimate from 6% year-on-year to 12% for IMI Fluid Power."We expect trends in Fluid Power to be the highlight of the update, and we have increased our estimates by 5% to reflect this," said the broker. The target price is hiked to 1,200p, from 950p, and a 'buy' rating is kept.With pharmaceutical giant Shire expected to outperform the sector in the near term, Credit Suisse keeps its positive stance on the stock and raises its target price to 2,100p, from 1,900p, following a solid first quarter."Shire reported a first quarter marginally ahead of expectations, with a solid performance from all key drugs," said analyst Luisa Hector, who noted strong US ADHD (attention deficit hyperactivity disorder) market growth.The broker also said that Shire is positioned to deliver the best sales growth (8% per annum) in its peer group over the next five years. An earnings growth of 13% per annum is also expected to be ahead of its peers. Credit Suisse retains its 'outperform' rating.While RBS has kept its target price for United Utilities at 680p, the broker has downgraded the water supplier to a 'hold', from 'buy', ahead of the group's full year results later this month.The broker expects full-year numbers to be down, reflecting the group's -4.3% K factor in 2010/11, "the first year of the five-year price control," said analyst Iain Turner.This is expected to cut regulated revenues and - with the group having exited all of its unregulated businesses - Turner notes that delivery and outperformance against regulatory targets will now be vital to future growth.