Broker tips: SuperGroup, Northgate, Thorntons

13th Jul 2011 12:56

While full-year results for trendy fashion retailer SuperGroup were broadly in line with forecasts, and many brokers have retained their buy ratings, analysts have noted their caution in regards to current trading and slowing growth.Current trading showed that for the first ten weeks of the current year (ended 10 July), group sales were up by 56%, "further slippage from Q4's total sales growth of 61% and 87% in Q3," notes Merchant Securities' analyst Amisha Chohan. "We believe this highlights weakness in the strength of the brand," she said. Nevertheless, Merchant Securities kept its buy rating. Peel Hunt also retained its buy rating and 1,800p target price. However, the broker expects to downgrade its "top-of-the-range" pre-tax profit estimate back in line with consensus given current trading levels.Singer Capital Markets also kept its buy rating and 1,500p target, saying that "if you believe in the global potential of the brand then this represents a compelling entry point, albeit near term movements are likely to remain volatile."UBS has upgraded commercial vehicle hire company Northgate from sell to neutral after increasing its earnings forecasts for the next three years."Whilst we maintain our negative view on Spanish construction, the company has clearly been more successful in growing the non-construction parts of the business and as such we expect a much more modest fleet contraction in FY12 (6% vs 15% previously)," said analyst Alex Hugh.As such, UBS ups its earnings per share (EPS) estimates in 2012, 2013 and 2014, by 17%, 22% and 14%, respectively. Additionally, the broke notes that continued costs savings "and some conservatism on residuals going forward" could provide upwards pressure to forecasts.The target price is in turn raised to 350p, from 280p previously.FinnCap has cut its target price for Thorntons by 27% and reiterated its sell rating, saying that the chocolate and fudge retailer is "running up the down escalator"."Its new strategic plan is a sensible response to the pressures bearing down on the business. The problem is that some of those pressures are immediate," said analyst David Stoddart.Trading the fourth quarter was weak, the broker notes, and seems set to remain weak until Christmas, "at which point there is a reasonable chance that weather patterns will be less unhelpful than last year."BC