Broker tips: Kingfisher, Mitchells & Butlers, Britvic

21st Jul 2011 12:48

Singer Capital Markets said that despite DIY retailer Kingfisher reporting broadly weaker-than-expected trading over the last ten weeks, full-year forecasts are likely to remain intact. "KGF was slightly ahead of plan after Q1 and although the UK has been weak, this is not bad enough to more than offset the earlier gains, and overseas progress remains positive. We therefore do not expect forecasts to change, but the mix will favour France at the expense of the UK (B&Q)," said analysts Matthew McEachran and Mark Photiades.The broker keeps its fair value rating and 260p target price.Peel Hunt has reiterated its sell recommendation and 238p target price for pub group Mitchells & Butlers, saying that weak trading in the third quarter has exacerbated concerns on the "unfortunate corporate governance background".As a result, the broker is cutting both its pre-tax profit and earnings per share forecasts for the year ending 25 September by 5% to £155m and 27.7p, respectively."We recommend selling the shares, not only because of weakening trading, but also because of the unpredictability of board changes, lack of explanation for them, uncertainty as to the intentions of dominant shareholders, risk of a sector valuation discount becoming medium term, and increased risk of wider management instability."After a sharp fall in both sales and value recently for Britvic, broker Prime Markets maintained its sell rating for the soft drinks firm."Shares have tailed off this year though, and while the sharp downturn in sales and value over the past 4 weeks is arguably reflected in the chart, with shares having come such a long way, the current valuation after the falls is still toppy," he said.The broker added that until Britvic can show that recent trends have reversed to prevent further weakness in the shares, then a sell recommendation and 345p price target will stay in place.BC