Broker tips: Segro, DMGT, GKN

30th Mar 2011 13:03

After five "Golden Years" between 2005-10, property company Segro is now facing a period of intensive asset management challenges, according to Credit Suisse."We envisage Segro's efforts to reduce its high vacancy level (12% at group level) will increasingly prompt leasing deals that undermine its own estimated rental value," said analyst Steve Bramley-Jackson.The broker also has some concerns with regional and asset allocation. A 'neutral' rating is kept, but the target price is upped to 344p, from 318p.UBS cuts the target price at Daily Mail and General Trust by 7%, saying that the group's growth opportunities will come at a cost.The newspaper publisher and exhibitions organiser is focused largely on B2B growth as it expands into emerging markets and expands its technology/software product offering, the group said at an investor day."These, however, come at a cost, with management noting that despite circa 5% organic growth across the portfolio currently, re-investment would limit margin expansion," the broker said.UBS keeps its 'neutral' rating but reduces its target price from 575p to 535p, to reflect downgrades and near-term uncertainty over the potential impact of weakening UK consumer confidence on ad revenues.RBS keeps its 'buy' on GKN and raises the target price from 225p to 235p, as it expects the blue chip aerospace and vehicles engineer to enjoy a "steady recovery in global automotive production".The broker thinks that sentiment poses a challenge for the group in the medium term, given the severe downturn in the automotive industry three years ago, but believes it should not deter investors."GKN's current valuation implies that it remains very cyclical and that the events of 2008-2009 might be repeated, perhaps in three or four year's time. We doubt that very much," said the broker.BC