Broker tips: TUI travel, Thomas Cook, M&B

24th Mar 2010 12:51

Holiday firms were in focus on Wednesday morning after TUI Travel issued an upbeat trading statement.Despite the positive noises emanating from TUI, broker Panmure Gordon has still cuts its rating for the firm from 'buy' to 'hold'.'We leave our 2010 forecasts unchanged and retain our 325p price target but downgrade our recommendation from buy to hold on valuation grounds; we prefer Thomas Cook where we have a 315p price target and a buy recommendation,' the broker said.Talking of Thomas Cook, TUI's big rival received a lift from HSBC, which said it would be upgrading its medium term earnings forecasts for the company, though it maintains its 'overweight' rating and 315p price target. 'Visibility for 2010 trading is limited, but a recovery in consumer confidence and weak comparisons bode well. Foreign exchange and industry capacity increases remain risks, but are more than priced in on current valuation,' HSBC said. KBC Peel Hunt has raised a glass - and its share rating - to Mitchells & Butlers' strategic review, which the broker describes as a 'turning point' for the group.'This strategic decision is right to confirm the move to core food brands, to leverage MAB's [Mitchells & Butlers'] core strengths despite the faint embarrassment of rubber-stamping the previous board's view,' KBC analyst Paul Hickman said, adding that he expects to be upgrading earnings estimates significantly as a result of this new strategic direction.The pubs group will soon be expecting to be described as a restaurant group after announcing it is to focus on its main food brands: Harvester, Toby, Crown Carveries, Sizzling Pub, Premium Country Dining, and Vintage Inns.'Although this is an overall strategy statement, we assume annual capex [capital expenditure] towards these drive brands of £40m. Together with the first two years of cost actions, this would upgrade our FY2010E pre-tax to £155m and EPS to 27p, and FY2011E to £180m/31p, putting the shares on 10.7x falling to 9.4x,' the broker said.KBC Peel Hunt now rates the shares a 'buy', having switched its rating from 'hold'.