Broker tips: Xstrata, JD Sports, Charter

27th Jun 2011 12:58

UBS has cut its forecasts for FTSE 100-miner Xstrata, saying that the first half of 2011 is "one they'd probably like to forget.""We are cutting our earnings estimates for Xstrata to reflect lower realised pricing in coal, higher than expected costs, adverse currency movements as well as lower weather related volumes," said analyst Olivia Ker and Ben Davis.However, "we expect to see a recovery in 2H earnings with improved coal and copper volumes, and higher coal prices," analysts said.While a buy recommendation is kept, the target price is reduced to 1,700p, from 1,740p.To reflect JD Sports Fashion's Spanish acquisition announced earlier this week, finnCap has upped its forecasts for the sportswear retailer and reiterated its buy rating."On Monday we covered JD's move into Spain via a 50.1% investment in Sprinter, a 47-store chain. That Spanish-incorporated subsidiary will, in turn, own 70% of JD Sprinter, a company created to develop JD stores in Spain: the remaining 30% will be subscribed directly by JD, giving it an effective 65% stake," explains analyst David Stoddart.At the same time, the group acquired the businesses and assets of eight of the fashion chain Cecil Gee's stores from their owner Moss Group for £1.7m. "We have re-modelled JD to add in the Spanish businesses and the resulting minorities. We have added the Gee stores into the Scott's estate in such a way as to slightly reduce its contribution this year," Stoddart said. The target price is hiked from 1,175p to 1,190p.Singer Capital has downgraded engineering firm Charter International and slashed its target price following the profit warning earlier this month."It is very uncomfortable downgrading from a Buy recommendation after a profit warning, however ESAB is struggling to generate margins much higher than during the 2009 downturn, despite a clearly improved backdrop," said analyst Jo Reedman."Furthermore the change in expectations at ESAB has been worryingly rapid, since numbers and prospects appeared solid as recently as the Q1 IMS in April. Our confidence in the group's near term prospects has been reduced, and we downgrade our recommendation to Fair Value," Reedman added.The target price is cut from 945p to 600p.BC