Broker tips: WPP, G4S, Bunzl

24th Aug 2009 13:02

Security solutions provider G4S is still enjoying top-line growth but the 4.8% improvement in organic growth over the first half of the year disappointed the market.Broker Panmure Gordon observes that currency movements had something to do with the lower than expected improvement in organic growth while the group also encountered lower economic growth and inflation in many of its markets.The broker said the half-year results were ahead of its expectations at the revenue and profit before interest, tax and amortisation level, though pre-tax profit was slightly below par.'Ahead of the analyst meeting we maintain our headline forecasts and Sell recommendation, with nearly 30% downside to our unchanged target price,' the broker said.Advertising group WPP was the top performing blue-chip on Monday despite expectations that Wednesday's interim results will see a decline in like-for-like sales of around eight or nine per cent in the second quarter.The share price was boosted by Deutsche Bank issuing a 'buy' recommendation. The bank was previously neutral on the stock.In contrast, Jefferies International is a seller of the shares. The broker notes that the advertising sector is traditionally one of the last to emerge from a recession.Distribution and outsource specialist Bunzl was wanted Monday morning after reporting a rise in interim pre-tax profits. The figures were a tad below Ambrian's forecasts, but at least they contained no nasty surprises.'The weakness in the UK & Ireland had been clearly flagged as the business mix is more cyclical ? it includes vending and more non-food retail customers than other regions. There was also a negative currency transactional exposure in the UK supply chain,' the broker noted.The acquisition hungry group has not been able recently to spruce up its performance with a few bolt-on deals but, given the current economic environment, Ambrian believes the acquisition pipeline will fill up over the next 12 months.