Broker tips: Insurers, Misys, Domino's Pizza

1st Oct 2009 12:53

The life assurance sector has recovered strongly from its first quarter lows but there is still plenty of juice left in the major players, Panmure Gordon reckons.The broker has increased its target prices for five insurers: Prudential (to 732p from 585p), Standard Life (234p from 212p), St. James's Place (315p from 215p), Aviva (526p from 435p) and Legal & General (99p from 85p).All of the above bar Standard Life have 'buy' recommendations from the broker; Standard Life is rated a 'hold'.'Given the dramatic fall in 2008, Q1 2009 was largely based on fears of asset Armageddon, and we believe that the recovery along with the reintroduction of previously abandoned valuation methodologies will continue to drive share prices,' said Panmure Gordon analyst Barrie Cornes.It is time to take profits at Misys, reckons Canaccord Adams, after the software solutions provider's Wednesday trading update provided no reason to upgrade earnings estimates to justify the company's heady multiples.Canaccord Adams concedes that Misys is cheap on a sum of the parts valuation basis but 'the real issue is the value of Allscripts,' the company's US associate focused on the healthcare market.Allscripts trades on 32 times estimated full year 2010 earnings and 27 times projected full year 2011 earnings. 'With a potential to miss revenue targets for the full year and increasing risk from larger deals, we think it will at best stagnate and at worst derate,' the broker said as justification for its downgrade of the stock from 'hold' to 'sell'. The price target has been lowered from 200p to 180p.Panmure Gordon is keeping its 'hold' rating, however, and has 'half-heartedly' lifted its price target from 167p to 193p, after Misys followed up its trading update with an upbeat investors conference call.An acceleration in third quarter like for like sales at Domino's Pizza has prompted Charles Stanley to revise its earnings projections for the pizza delivery firm.Citing 'top line activity and the beneficial impact of margin gains,' Charles Stanley has upgraded its profit before tax forecast for the current year to £28.2m, while the 2010 and 2011 estimates have been hiked to £31.1m and £33.8m respectively.The price target has been lifted from 305p to 365p. The broker reiterated its 'buy' recommendation.