Broker tips: Rank, Thomas Cook, N Brown

10th May 2011 12:33

Credit Suisse highlights an "attractive story" and "sensible valuation" at casino and bingo hall operator Rank, but keeps its 'neutral' stance saying that the stock is lacking near-term catalysts.Last week, Guoco acquired an additional 11.6% shareholding, taking its stake to 40.8% and forcing a mandatory cash offer for all outstanding Rank shares. However, at 150p per share, Credit Suisse says that the offer fails to include a sufficient premium (1%) for control.The broker thinks that Rank will continue to take market share in a UK casino market which is already growing at 3-5% per annum - which led to upgrades through 2009 and 2010 - but notes that this is now fully factored in to its estimates.Nevertheless, the target price is raised to 161p, from 142p.RBS has scaled back its target price for travel company Thomas Cook after an "uninspiring update" which saw first half numbers come in under expectations.First half operating losses were worse than the broker's expectations at £166m, up from the £130m reported last year."While the gap can be explained by Easter falling in the second half (£15m) and the cost of revolutionary activity in Africa and the Middle East (£22m), the disappointment is that cost savings and the strength of trading in Scandinavia and Condor were wiped out by a very poor result in the UK," the broker said.The target price is lowered to 230p, from 260p, but a 'buy' is still kept.Solid final results from internet and catalogue home shopping company N Brown have led Peel Hunt to raise its target price from 300p to 340p.A 5% year-on-year increase in pre-tax profit to £98.2m was £0.5m ahead of the broker's forecast, "driven by acquisition, organic growth and carrying international investment," said analyst John Stevenson."We reiterate our 'buy' stance and raise out target price...reflecting the continued long term earnings per share growth N Brown continues to deliver," said Stevenson.---BC