Broker tips: Standard Chartered, IAG, Aviva

1st Aug 2011 12:53

Nomura says that Standard Chartered's premium valuation is justified, and keeps its buy rating and 1,800p target price on the stock ahead of its first half results on 3 August.The broker expects the emerging markets banking giant to deliver $3.4bn in pre-tax profit on revenues of $8.65bn, representing year-on-year growth of 10% and 9.2%, respectively. "Valuation has eased as part of the general sector as well as concerns over Asian tightening. We estimate the stock is now trading at a premium of only 3% against the sum of parts of local peers, down from double-digit percentages earlier this year. However, in a European context the stock is still trading at a substantial premium to the both the Banks sector and HSBC." Citi has reiterated its buy rating on International Consolidated Airlines (IAG), saying that the group's outlook is the most robust in its sector group.The airline's second quarter results announced on Friday 29 July were the "best so far of the European flag carriers", according to analysts Andrew Light and Nithin Pejaver.IAG's EBITDAR (earnings before interest, tax, depreciation, amortisation and rent) margin of 13.2% in the three months ended 30 June was superior to Air France KLM's 8.1% and Lufthansa's 9.1% (10.8% for its airlines), and was the only one out of the three to beat consensus, the US broker notes.The target price stays at 300p.Panmure Gordon keeps its buy rating on Aviva ahead of its first half results on Thursday 4 August, noting recent press speculation that its Asian assets are on the block.Panmure thinks that the valuation of the Asian operation would be worth up to £750m, based on a 2010 embedded value of £600m for the whole of the Asia Pacific region.The broker keeps its buy rating and 528p target price. "We believe that the share price is too low, having been affected by overplayed fears of the impact of sovereign debt," Cornes said.BC