Thursday tips round-up: AstraZeneca, Morgan Sindall, Afren

2nd Jul 2009 06:14

Yesterday's failed blockbuster drug can be tomorrow's niche therapy. That would appear to be the prognosis from AstraZeneca, which yesterday won European marketing approval for Iressa, its once-a-day lung cancer pill.Longer-term challenges remain: notably the tide of patent expiries, such as the 2012 loss of protection on Seroquel, AZ's schizophrenia treatment, that continue to weigh on the shares. But, at £27.07½, or eight times earnings, a 5 per cent dividend yield is reason enough to hold on, according to the Times.Offering a dividend yield of 6 per cent, and with Morgan Sindall holding a decent amount of cash, the Independent cannot really see the justification in jettisoning the shares. The group has continued to win contracts in recent months and remains a strong pick within the industry, even if the sector as a whole may suffer in the coming months from cuts in public spending. Hold.The Telegraph says Morgan Sindall's share price has outperformed the FTSE All-Share index since February, according to calculations by Panmure Gordon, and advises taking profits.At the end of last year Afren had net debt of $287m (£175m), with $117m of cash on the balance sheet. In April the group raised $126.3m before expenses in a placing, so the company should now be in a net cash position. The shares are trading on a December 2009 earnings multiple of nine times, but this falls to 3.4 next year as more production kicks in. The company pays no dividend. While not without risk, at the current level, the shares are a speculative buy, says the Telegraph.WSP is performing well operationally and has positioned itself well in anticipation for tougher times ahead. The group is probably the Independent's pick in the sector, especially given the yield, and for that reason it would hold on to the stock. Avanti Communications has lived up to its name. Shares in the AIM-listed satellite broadband specialist have advanced more than 50 per cent since the start of the year and pushed forward again yesterday as it raised £32 million, or nearly half of its stock market value, through a share placing at 225p. No profits are due until 2012. But at 259¼p, higher risk investors should take a ride, says the Times.Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.