Broker tips: Tesco, Carnival, Aveva

14th Jun 2011 12:24

Matrix has kept its 'reduce' rating on supermarket titan Tesco, saying that it expects the shares to underperform, given that the first quarter figures missed estimates.He says that non-food is a big underlying drag - down 5% on a like-for-like basis - given that it accounts for around a fifth of the company's UK sales."The shares have performed in line with the sector and the market in the past month, and outperformed both over the past three, which does not suggest that a weakish Q1 [first quarter] is priced in, so we would expect the shares to underperform from here," said Gadsby. The target price is left at 370p.Nomura has pulled back its target price for cruise operator Carnival from 3,250p to 2,820p, after the company cut its fiscal-year (FY) earnings guidance ahead of its second quarter results next week.Carnival reported on Monday that compared with previous FY2011 earnings per share (EPS) guidance given in March of $2.55-2.65, there would be a $0.20 (8%) downgrade. As such, Nomura cuts its EPS forecasts for 2011 and 2012 by 10% and 12%, respectively, hence the reduction in target price. "While this is a downgrade, it is encouraging that the North American brands continue to trade well, and the majority of the weakness in Europe relates to disruption from MENA / Japan." A 'buy' rating is kept.Panmure Gordon has raised its target price for engineering software firm Aveva from 1,599p to 1,661p, but keeps its 'hold' rating on valuation grounds.The broker is pleased with the strong growth in rental license fees from Asia Pacific (up from £12.8m to £21m during the year ended 31 March), and forecast-beating customer numbers at AvevaNET.However, "[w]e...still bellyache about the valuation...hence we retain our 'hold'," O'Connor added.---BC