Broker tips: Tesco, Aggreko, WH Smith

8th Jun 2010 13:35

Philip Clarke, the nominated successor to Sir Terry Leahy, the Tesco chief executive who announced his impending retirement on Tuesday, is a bit of an unknown quantity in the City but broker Charles Stanley reckons Clarke's pedigree looks good."Given his already lengthy career at Tesco and success in developing the international business, we consider the appointment to be a good one. We expect his approach to be evolutionary and do not anticipate any radical departures from current strategy," speculated analyst Sam Hart.The broker's recommendation on the stock remains "accumulate", with the supermarket giant's long term earnings growth prospects remaining good, "with International and Tesco Bank likely to be key drivers."Panmure Gordon looks set to lift its earnings estimates for Aggreko after the temporary power solutions provider weighed in with another impressive trading update.Panmure Gordon reckons the outlook for the second half of Aggreko's financial year "looks incredibly positive" and is anxious to learn more at Wednesday's analyst visit.The broker is sticking with its "hold" recommendation, however, as the shares have shot up by a fifth already in the last month, though it is contemplating bumping up its price target to around 1460p from 1212p, a price the shares have long since left behind."With longer term energy requirements unlikely to dampen given the background for infrastructure spending patterns and the likelihood for US storm revenue to be a positive given last year's inactivity, we believe Aggreko remains a high quality situation," the broker said.It's business as usual at newsagent WH Smith with FinnCap predicting that the company's interim management statement (IMS) will not prompt any earnings estimate upgrades.Though like for like sales in the 14 weeks to 5 June were slightly weaker than expected the broker thinks that "the statement at the end of Smith's IMS that we remain confident in the outcome for the full year, looks like code for don't change forecasts".The broker remains a fan of the stock, noting that it trades on a price/earnings ratio of 11.5 based on projected calendar 2010 earnings, versus a sector average of 12.9."We expect Smith to prove more resilient than most in the challenging retail environment we anticipate in the coming year. The apparent ability to deliver in-line PTP [pre-tax profit] despite weaker than anticipated revenues signals that resilience," said FinnCap analyst David Stoddart.