Broker tips: Thomas Cook, Invensys, Prudential

14th May 2009 12:50

The Mexican flu scare has slowed bookings at holiday firm Thomas Cook but the underlying momentum is encouraging, reckons KBC Peel Hunt.'Stripping out the short-term impact from Mexico, current booking patterns are trending towards capacity,' notes KBC analyst Nick Batram. 'Of particular note is that UK average prices are up 15% over the last three weeks, a significant improvement in Northern Europe bookings (+17% over the past three weeks) and a solid performance from Continental Europe (-3% bookings v -16% cumulative),' Batram adds.The company is on target to meet expectations at the operating level, in the view of KBC. 'We continue to like the medium to long-term prospects for the major tour operators and a prospective PE of 8x at the current point in the cycle looks good value for a group of Thomas Cook's quality,' the broker concludes, reiterating its 'buy' recommendation and 300p target price.Charles Stanley has summed up the investment appeal of Invensys in three statements: No debt; strong cash generation; a return to dividend payments.The broker has upgraded the stock to 'accumulate' from 'reduce' after the engineering company's results on Thursday morning in which it announced a net cash position of £286m and a final dividend of 1.5p.Although the results of the Controls and Process divisions were weaker than Charles Stanley had been expecting, the 38% increase in orders should provide the business with some protection from the worst of the economic downturn, analyst Jeremy Batstone-Carr believes.Life assurance group Prudential described its first quarter performance as 'resilient', a view with which broker Panmure Gordon concurs.'New business sales were ahead of the top end of the range and 8% ahead of consensus driven by better than expected performances in the US and Asia,' the broker said in a 'buy' note issued to clients.'The capital position has improved from year end 2008 with a surplus of £2bn (31 December 2008: £1.5bn) and corporate bond losses remain low,' Panmure analyst Barry Cornes noted.'New business margins are described as being ahead of 2008 reinforcing previous comments that sales growth will be concentrated on the more profitable products and areas which will both preserve capital and should be taken well,' Panmure Gordon said.The broker believes the current share price is too low and presents 'an excellent buying opportunity.'