Broker tips: Prudential, Thomas Cook, Carclo,

13th Aug 2009 12:49

Shares in life assurance giant Prudential are up nearly 40% over the last month but after the release of strong results on Thursday morning Panmure Gordon believes the shares are still worth buying.The interim results came in "well above the top end of the range of expectations" and according to the broker's analysis "the key driver appears to be new business profitability that, at £691m (+25%), was well above £537m consensus.""These are good figures, and have benefited from capital preservation and focus on profitability in tough market conditions," the broker added."The shares are trading at small discount to 30 June 2009 Embedded Value of 491p per share, which we believe to be unwarranted given the medium outlook for new business and cash generation from the Inforce business. The increase in dividend should be welcomed and our 2009E divi of 19.8p/share (+4.7%) gives an attractive 4.1% yield," the broker notes. Panmure Gordon has a target price of 585p for the stock.Shares in travel group Thomas Cook were given the cold shoulder on Thursday morning as the company said that it is unlikely to achieve its targets for 2010.The company's interim management statement gave broker KBC Peel Hunt the perfect opportunity to downgrade the shares to "hold" from "buy" after their recent good run. "The shares have rallied usefully from the 200p level and while the rating looks undemanding the best strategy looks to be to pick up stock on any placing," the broker said.KBC said Thomas Cook put in a solid third quarter performance with "synergy benefits, currency and product mix more than offset the £12.6m impact from swine flu."The broker was not surprised the company abandoned what KBC described as "its aspirational £480m EBIT (earnings before interest and tax) target for 2010"; KBC has pencilled in an EBIT figure of £431m for 2010."Although the shares have given back some recent gains and the rating (8x prospective 2010 PE) remains undemanding, the greater focus of attention on 2010 means that there is less room for significant share price appreciation in the short-term," believes KBC's Nick Batram. "Furthermore, the Arcandor overhang remains and a better buying opportunity may arise as this situation is addressed," Batram added.The outlook for technical plastic components supplier Carclo is broadly positive, reckons broker Charles Stanley, and the latest set of results represent solid progress."While the performance reflects a weaker H2 [second half], Medical & Optical continue to demonstrate strong growth with new programmes secured. Precision Products benefited from new contracts in supercar lighting. The aftermarket has continued to trade well overall, although volumes in communication cables and antennas declined by 30% in H2," Charles Stanley notes.The broker likes the look of Carclo's new technologies, CIT (Conductive Inkjet Technology) and Platform Diagnostics, which have the potential to transform the group, the broker believes. "News flow maybe limited in the short term however developments within its new technologies may well herald further share price progress," Charles Stanley said."We believe that CIT should start generating revenues in the later part of FY2010 if it continues its current pace of development. We believe that there is significant upside in the potential which is not reflected in the current price. We retain our Add recommendation but upgrade our target price to 120p on the progress seen in CIT and Platform Diagnostics," the broker said.