Broker tips: William Hill, Autonomy, IG

20th Jul 2010 11:37

The online division of bookmaker William Hill is starting to deliver on its potential in the view of KBC Peel Hunt which thinks that the shares look cheap from an historical perspective."Given the results produced by some of the pure online players, WHO's [William Hill Online] 24% growth in revenues and 43% improvement in operating profits is an impressive result. The move offshore has clearly helped the bottom line, but the top-line growth reflects a business that is beginning to fire on all cylinders. Sportsbook turnover rose 59%, with gross win up to 7.7% (6.8%)," KBC analyst Nick Batram observes.While the online side is coming up trumps, the betting shop side of the business is having a tough time of it, with the World Cup windfall offset by the company's worst ever Ascot race meeting performance.KBC Peel Hunt thinks there remains an air of suspicion towards the traditional bookmakers that is reflected in the share price, which trades at about a 20% discount to its historical price earnings ratio (based on next year's projected earnings). "William Hill has done relatively little wrong since the acquisition of the assets from Playtech and addressing the balance sheet," Batram asserts, and thinks that with the online business starting to gain traction "then patient investors should be well rewarded."The broker has a "buy" recommendation on the shares and a price target of 227p.Ahead of Autonomy's second quarter results on Thursday Panmure Gordon has adopted a more cautious view on the shares, particularly after the pummelling IBM shares took in the USA after a mixed set of figures on Monday.Panmure Gordon moves its rating from "buy" to "hold" and shaves a couple of pence off its price target, which moves to 2149p.The broker is expecting the data search software titan to report figures that are merely in line with market expectations, "and while it will talk through its (many) drivers for earnings upgrades shares, following the usual pattern, shares are likely to be hit on the day," suggests George O'Connor. If that proves to be the case then it will provide an opportunity to stock up on the shares at a reasonable price, O'Connor adds.Following a good run for the share price Singer Capital Markets is contemplating revising its buy recommendation for IG Group despite the spread betting firm delivering full year results in line with expectations.The broker has bumped up its price target from 440p to 485p, and said it still likes the company's prospects over the longer term but it thinks the company is now trading close to its fair value."Whilst comparables are increasingly tough, strong momentum in client opening has continued which bodes well for further revenue growth across most geographies. In addition, the regulatory approvals at the US business, Nadex, allow IG now to develop a white label business in that region. This is likely to take some months before we see revenues coming through but over the longer term, this could offer significant potential," suggests Singer.Panmure Gordon also thinks the shares are starting to look a bit toppy. At 14.5 times current year earnings, the shares continue to trade well within their historic valuation range, the broker notes. However, although Panmure sticks with its "buy" recommendation it sees "no clear scope for upgrades in today's statement," and consquently "we expect some profit taking on the back of a strong recent share price run."