Broker tips: Trinity Mirror, Rank, Morgan Crucible

29th Jul 2010 13:04

Interim results from Daily Mirror owner Trinity Mirror were ahead of expectations but the publisher faces 'aggressive competitor activity' in the second half of the year, Singer Capital Markets warns.Nevertheless, the broker predicts that the first half performance should see market consensus forecasts for full year pre-tax profit move closer to £95m from the current level of £85m.The broker rates the stock a "buy" and says the valuation remains "very low at potentially just 3x earnings"."The company caveats its outlook with the market wide standard statement on macro, but goes on to say that it expects 'further modest improvement in the second half', albeit with continued month on month volatility. Excluding [recently acquired] MEN July revenues are expected to fall 6% with both circulation and advertising at the same level. Within the divisions advertising is expected to be down 9% for Regionals and flat for Nationals while Circulation is expected to decline by 6% for both units. Overall July revenues are expected to increase 3% including MEN," Singer analyst Johnathan Barrett said.KBC Peel Hunt saluted Rank Group's solid interims and expects the stock to continue to outperform."Grosvenor continues to be the star of the show, but Mecca has also shown its first growth in customer visits for a decade. With debt down to £133m, the group also has the balance sheet to increase investment in core areas," suggests KBC analyst Nick Batram.The broker has nudged up its forecast for full year profit before tax to £50m from its previous estimate of £48.4m. KBC believes that Rank looks an attractive investment in an uncertain market and has upgraded the stock from "hold" to "buy"."Grosvenor remains the jewel in the crown and future growth will come from further G casino conversions and the 12 non-operating licences. Mecca is slowly turning around, but customer visits have stabilised and the Full House concept continues to be refined," Batram says.Top line growth is finally arriving at engineer Morgan Crucible but unfortunately, notes Panmure Gordon, it coincides with below par margin performance.Nevertheless, the broker has raised its price target from 220p to 240p to reflect the pick-up in revenue, but at the same time it is cutting its recommendation from "buy" to "hold" in the belief that, "with its stretched balance sheet, we believe that we can re-visit this stock at lower price levels later in the year.""The 8% increase in the dividend is welcome but, in cash terms, it is a slight illusion and is paid for by the scrip alternative," claims Panmure analyst Oliver Wynne-James.