Broker tips: Shanks, Enterprise Inns, KCOM

26th May 2011 12:32

Peel Hunts says that 2010/11 results from Shanks were 7% ahead of expectations after the waste management firm made "substantial" progress over the past 12 months, in regards to "expansion, contract wins, cash generation, cost reduction and financial stabilisation."Pre-tax profit for the year ended 31 March was £35.2m, ahead of the Peel Hunt's estimate of £33m, despite challengng winter conditions. The broker re-iterates its 'buy' rating and ups the target price from 138p to 140p.UBS has upgraded its rating on Enterprise Inns from 'sell' to 'neutral' on valuation grounds, but stresses that concerns remain for the pubs group on the availability of cash for shareholders and falling beer volumes.While the broker does scale back its target price to 80p, from 85p, it thinks that the recent share price decline (over a third by the start of January) is sufficient enough for the rating upgrade.However, "As like-for-like gross profits continue to decline and the estate shrinks in number, we believe that the cash generated from operations will need to be topped up with cash from asset sales to cope with the interest bill and debt pay-down," UBS said.KCOM's target price has been lifted by almost a quarter by finnCap, after positive preliminary results from the telecoms group, in which the dividend delivery and the guidance "ooze[d] confidence.""After the positive surprise at interims of significantly improved dividend guidance of 3.3p, KCOM's confidence is evident with the over delivery at 3.6p div for the full year, and a maintained 10% div growth guidance," said analyst Andrew Darley.finnCap says that the strength in cash and the dividend were the only real surprises from the full-year performance, but numbers were 'in line' and "complete a genuinely transformational year." The target price now stands at 80p, up from 65p previously. The broker still recommends a 'buy'.---BC