Broker tips: Whitbread, Bellway, Connaught

13th Oct 2009 13:13

Interim results from Whitbread have generally been well received by the market with the improving trend at the company's Premier Inn hotel business being the most positive aspect.Jonathan Jackson, head of Equities at Killik, is not inclined to change next year's earnings forecasts after the interim figures, however, which leaves the shares trading on 15.7 times projected earnings per share for the year to February 2011, making the shares no more than a 'hold' in the broker's view.Panmure Gordon remains an advocate of buying the shares, however, and has lifted its target price from 1270p to 1470p, and bumped up its earnings forecasts by around 10% on the basis of higher margin assumptions.House builder Bellway has made a believer of Panmure Gordon after announcing full year results that were ahead of the broker's expectations.'With the stock 12% off its September high, we are upgrading our recommendation from Hold to Buy,' the broker said, adding it would probably revise its earnings forecasts after the company's analysts meeting. The target price has been upped to 872p from 799p.'We understand that since August, Bellway has committed in excess of £100m into new land deals (primarily in the South) which should help to significantly improve the margin performance on the business in 2012 and beyond,' the broker said.Broker Charles Stanley is sticking with its 2009/10 full year profit forecasts for Connaught after the social housing firm announced 2008/09 figures that were in line with expectations.Connaught announced a 39% rise in pre-tax profit to £42.5m in the year to 31 August 2009, slightly higher than the £41.2m Charles Stanley had been expecting. The broker expects current year pre-tax profit to rise to £54.6m, which would put the stock on a rating of 14.9 times 2009/10 earnings. 'Whilst that may sound high, Connaught's strong growth and high visibility means one can still justify buying the shares sure in the knowledge that its relative rating will look increasingly attractive as time goes by,' analyst Geoff Alum reckons.The broker has a 'buy' recommendation and a price target of 484p.Panmure Gordon is slightly less enthusiastic, reiterating its 'hold' recommendation and 340p price target, despite conceding that the company is maintaining positive momentum through its acquisitions policy.Numis Securities' position is somewhere in the middle between Panmure Gordon and Charles Stanley. It has an 'add' rating and has raised its target price to 481p 'to reflect the recovery in ratings of the quality large growth outsourcers (e.g. Capita)'