Broker tips: WPP, G4S, 888

27th Aug 2009 12:57

The share price of WPP recovered a little on Thursday from the battering it received following Wednesday's sub-par results, but Citigroup reckons shareholders in the advertising giant should brace themselves for more pain.Echoing the view expressed earlier this week by Jefferies International, Citi warned that the advertising sector is likely to be one of the last to recover from the recession, and next year's results are likely to make gloomy reading. The shares are up by around one-sixth over the last month and Citi recommends banking profits. Security services firm G4S saw a slowdown in organic turnover growth in the first half of 2009 but that was due to the global economic downturn and a slide in regional inflation rates, rather than any fundamental problem with the company, reckons Charles Stanley.The broker remains a buyer of the stock which it says appears to be valued at a discount to the sector price/earnings ratio of 11 and also to members of its peer group, such as Securitas, which trades on an earnings multiple of 12.Online gaming firm 888 Holdings needs to complete a 'meaningful deal' in order to kick-start upward share price momentum, according to broker KBC Peel Hunt.888's business to consumer (B2C) revenues fell by 18% year-on-year in the first half, though second quarter revenues did at least show an improvement on the first quarter, while revenues from the business-to-business (B2B) side rose 42% from a year earlier.However, KBC notes that second quarter B2B revenues were only 4% higher than first quarter figures, suggesting that momentum has slowed.This could be just a pause for breath, but it does increase the pressure on the group to deliver a sizeable new B2B deal,' KBC analyst Nick Batram believes.