Broker tips: ITV, Ladbrokes, Speedy Hire

12th Oct 2009 12:36

The share price of bookmaker Ladbrokes has dived about 9% since the company announced a slide in profits and a cash call last Thursday, though things could have been worse, according to Nomura Securities.'Judging by the market's reaction, it was expecting a weak Q3 [third quarter] trading update. The fact that it was primarily down to a fall in win margin reflecting adverse sporting results seems to have been taken as an acceptable explanation,' the broker notes, while adding that 'debate over whether there is any structural dimension to the fall is still being aired.'Nomura has cut its price target from 185p to 135p, explaining that 28p of the 50p cut is to reflect the dilutive aspect of the one for two rights issue while the rest is due to a lowering of earnings forecasts following last Thursday's statement.Sir Michael Bishop, the former boss of airline BMI, has joined the lengthening list of people who do not want the chairman's job at ITV, but that has not stopped broker Goldman Sachs from advising its clients to buy shares in the company.Goldman Sachs has upgraded its recommendation on the terrestrial broadcaster from 'neutral' to 'buy' despite the turmoil at the top at ITV, which is also on the look-out for a new chief executive officer.The US bank expects a 'modestly stronger-than-expected recovery' in television advertising revenues in the third and fourth quarters, with relative performance helped by weak comparative figures from the second half of 2008.Goldman has also seen signs of advertisers booking slots at late notice, which should give a boost to ITV. The broadcaster's share price has underperformed the market, Goldman notes, and by the US bank's calculations there is the potential for the share price to rise by as much as 25% from here.Panmure Gordon has turned bearish on Speedy Hire after the plant hire firm saw little sign of the normal seasonal pick-up at the start of the second half of its financial year.The broker has reduced its earnings forecasts for the company following Monday's trading update. 'First half turnover has been lower than we expected at -29%, with further cost cutting undertaken as a result and the footprint of the operation reduced further,' the broker said, adding that the second half of the company's financial year has got off to a downbeat start.The broker expects that despite the cost cuts Speedy Hire has implemented, 'the result on the bottom line will still be severe,' with little scope for further cost cuts that would not endanger the long term health of the business. Panmure Gordon has trimmed its share price target to 24p from 28p and cut its rating on the shares from 'hold' to 'sell'.