Broker tips: Tate & Lyle, Homeserve, Tullow Oil

19th May 2009 13:01

The poaching of highly regarded Javed Ahmed from Reckitt Benckiser to take over from Ian Ferguson as CEO at Tate & Lyle has given a rush to the share price of the sugar and sweeteners group.Broker Charles Stanley suggests that the arrival of two new brooms at the top - Ahmed will take over as chief executive officer on 15 November while Sir Peter Gershon will succeed Sir David Lees as chairman at the end of the year - probably means another strategic overhaul is in the offing.With the shares currently yielding more than 6%, there is some concern that the company may take the opportunity to review its dividend policy when the new men get their feet under the desk.'Full year results are due on 28th May and we maintain our conviction that the company will deliver on its reiterated promise to pay a progressive dividend despite running with balance sheet gearing at c100%,' writes analyst Jeremy Batstone-Carr. He is not so certain that the new management will be so wedded to a progressive dividend policy, however.The broker has reiterated its 'accumulate' recommendation on the shares.The decision by home emergency insurance cover specialist Homeserve to get shot of its UK Emergency Services division has been welcomed by analysts at Panmure Gordon and Royal Bank of Scotland.Panmure Gordon analyst Andy Brown reckons the decision to exit the UK emergency services area will remove 'a key uncertainty behind the share price,' a view echoed by Jane Sparrow at Royal Bank of Scotland (RBS), who says the move 'simplifies the group going forward.'Against this, Sparrow notes that the company has spent a lot of money building this business and it will probably only receive a fraction of its investment back when it sells it,RBS, which has a 'hold' recommendation for the shares, said Homeserve's interim results revealed a performance that was slightly more resilient than expected, though the boost was 'largely delivered by cross-selling with no change in the overall customer numbers versus the previous year.'Panmure's Andy Brown sounds more optimistic over Homeserve's prospects.'We believe the UK plumbing business is not yet mature and there is upside potential from international growth, especially in the US. The company has low cyclicality, good visibility and high margins, and it is cash generative,' Brown said.The broker recently lifted its target price for Homeserve to 1300p.A spectacular run of success with its drilling operations in Ghana and Uganda has helped the share price of Tullow almost double this year, but UBS thinks there is more to come.The Swiss bank has upped its price target for the Irish oil company to 1015p from 900p.