Broker tips: Whitbread, Weir, Shell

19th Jun 2012 11:22

In spite of Whitbread's robust first-quarter results, Investec reiterated its 'sell' rating for the Premier Inn and Costa owner on Tuesday, saying that it retains a bearish long-term outlook on the stock.The broker has raised its full-year earnings per share (EPS) forecast by 2.3% from 140.6p to 143.8p reflecting better-than-expected hotels trading. As such, the target price is raised from 1,450p to 1,500p."We feel this fairly reflects the free cash flow (FCF) generation outlook for the group, with our bear case (retain 'sell') supported by our view that Whitbread faces domestic demand constraints in hotels/restaurants into H2 2013E/FY14E and international expansion limitations in hotels," said analyst James Hollins.Jefferies has reiterated its 'buy' recommendation and 2,185p target price for engineering giant Weir Group, saying that consensus upgrades are in order following Tuesday's Capital Markets Day.In a brief statement that highlight the presentations given to investors, Weir reconfirmed its full-year guidance. Jefferies said that this implies a pre-tax profit of £470m, which would see Bloomberg consensus figures raised by 4%. "This will be taken well by the market, as a lot of bad news is priced in at the moment." said analyst Andy Douglas.Nomura has maintained its 'buy' rating and 2,700p target price for big oil player Royal Dutch Shell, saying that the shares still remain 'inexpensive'.The broker takes a look at the group's Arctic exploration programme, one of a number of frontier plays to be tested over the next couple of years. It says that success offshore Alaska would be material to the share price "even for a company the size of Shell"."Success would add to our existing thesis that cash generation from Shell's growth projects (primarily Pearl GTL) and exposure to tightening global LNG markets is underappreciated.BC