Broker tips: Sainsbury, AstraZeneca, Imperial Tobacco

12th May 2011 12:58

Even though Sainsbury's full-year results were in line with expectations, Nomura thinks there's better value - and growth - elsewhere in the supermarket sector, and downgrades its sales forecasts or 2012.Nomura trims its like-for-like sales forecasts (excluding fuel, including VAT) for the current year ending March 2012 to +1.5% (from +2% previously) and its estimates for the increased space impact on sales to +2.5% (from +3%). Nevertheless, the target price is kept the same at 365p, and a 'neutral' rating is maintained. "We see greater opportunities at both Tesco and Morrison, and at more attractive valuations."UBS has upgraded drug giant AstraZeneca to a 'buy', from 'neutral', and adds the stock to its 'Key Calls' list on upcoming catalysts, such as the US Food and Drug Administration's (FDA) decision on the group's Brilinta drug.The broker highlights consensus estimates for the impact of the FDA decision on Brilinta (treatment for acute coronary syndromes, or ACS), which suggest a 3% earnings per share (EPS) downside on failure, versus a 3-40% EPS upside on success.UBS predicts that Brilinta - after beating the number two drug in the world, Plavix, on mortality - could capture $2.9bn of the $7.5bn non-US ACS market opportunity in 2015, which could boost core EPS by 10-15%.The target price is hiked to 3,800p, from 3,250p.Credit Suisse remains a buyer of tobacco giant Imperial Tobacco and raises its forecasts for 2012-13 following the company's half-year results announced on Tuesday.The broker ups its target price from 2,330p to 2,420p for three main reasons: a) "an attractive total 'equity' yield of 6.5%...;b) "a compelling and low-risk mid-teen dividend per share growth over the next few years and; c) second-cheapest valuation in global tobacco on our estimates," said analyst Rogerio Fujimori.Earnings per share estimates for 2012-13 have been increased by around 1%, "as we have baked £500m annual buybacks into our model." An 'outperform' rating is maintained.---BC