UK MARKET TALK ROUNDUP: BROKERS COMMENTS

23rd Jun 2010 09:33

Broker comments in the UK today. Compiled by Dow Jones Newswires Markets Desk, [email protected] Contact us in London. +44-20-7842-9464 [email protected] 0833 GMT [Dow Jones] St James's Place (STJ.LN) will be the biggest beneficiary amongst the UK life insurers from Tuesday's emergency budget says Panmure. Its share price had reacted badly to previous plans to curb pension tax relief for higher- rate tax payers and the proposed capital gains tax changes, with the share price about 20% lower than it was in November '09 when those issues were first highlighted. Panmure says key positives are pension tax relief, CGT not biting as hard as first anticipated and confirmation of the abolition of compulsory annuitization at 75 years. Buy ratig, 345p target. Shares are -1.1% at 222.5p. ([email protected]) 0746 GMT [Dow Jones] BP's (BP) $20B claim fund, net fines/penalties and clean-up costs announced last week are now included in ING's models, so the bank now assumes some $28.1B of total non-operating items over '10/'11 for the Gulf of Mexico catastrophe, versus $5.33B previously. ING keeps its target price at 712p, "albeit given the continued turmoil, political vilification and somewhat orchestrated media onslaught for BP, we accept this should be considered as a 1-3 year target level rather than a 12-month view." Nonetheless, ING still thinks BP offers very good deep value. Buy rating. Shares +088% at 337p. ([email protected]) 0659 GMT [Dow Jones] HSBC raises Whitbread (WTB.LN) target price to 1760p from 1690p following the company's 1Q results. The results show Whitbread outperforming recovering markets and the bank expects further market share gains from well-defined organic expansion and brand investment. It raises FY'11 pretax profit estimate by 4.5% to GBP263M, on better occupancy assumptions and to allow further headroom depending on the broader economic recovery. Overweight rating. Shares closed Tuesday at 1531p. ([email protected]) 0657 GMT [Dow Jones] Kesa Electricals' (KESA.LN) FY results are ahead of expectations, says an analyst. The analyst notes adjusted pretax profit of GBP81.9M, versus market expectations of GBP76M. The analyst also notes the unexpected increase in the final dividend and the announcement of a change in reporting currency to euros. However, the analyst says there is scant detail on the company's strategic roadmap. Shares closed Tuesday at 117p. ([email protected]) 0656 GMT [Dow Jones] Kesa's (KESA.LN) FY results are ahead of expectations, says Shore Capital. Says the beat is largely down to its French figures, while all other divisions report EBIT in line with Shore's forecasts. Notes there are few details on management's new strategy apart from increasing web penetration, maximizing cross channel approach and differentiating its service offer. Looks for more details at the morning's analyst meeting. While there may be some short-term relief on these results, thinks the debate over whether Comet can remain profitable will continue. Maintains hold recommendation, preferring DSG International (DSG.LN), rated at buy. Kesa closed Tuesday at 117.4p. ([email protected]) 0649 GMT [Dow Jones] U.K. banks will have to pay a combined GBP1.1 billion next year and GBP1.9 billion in 2012 in new taxes imposed by the U.K. government, JP Morgan estimates. Adds this is 4% and 5% of group earnings for those years, respectively. Says the levy is "less punitive" than expected, with a cut in U.K. corporate tax rate partially offsetting the expense. ([email protected]) 0646 GMT [Dow Jones] Stagecoach's (SGC.LN) FY results are significantly ahead of expectations, says KBC Peel Hunt. Notes FY pretax profit of GBP161.3M and EPS of 18.7p versus the brokerage's forecast of GBP143M and 16.7p. "Improving momentum, continuing balance sheet strength, and management's ambition continue to suggest upside for the share price." Adds, however, the main interest is in potential major acquisitions, which were not addressed. Has the stock at buy, with 220p price target. Shares closed Tuesday at 191p. ([email protected]) 0643 GMT [Dow Jones] Stagecoach's (SGC.LN) FY preliminary results are ahead of consensus forecasts, with pretax profit coming in at GBP161.3M versus consensus of about GBP150M, says an analyst. Notes the UK bus business remains robust and margins are good, while the revenue trend in North America also looks like it is improving. Says current trading remains in line with management's expectations. Shares closed on Tuesday at 190.6p. ([email protected]) 0631 GMT [Dow Jones] Kesa Electricals' (KESA.LN) FY adjusted pretax profit, for the year ended April 30, of GBP82M is ahead of expectations, says Arden Partners. Adds the dividend increase is a pleasant surprise. "The commitment to eliminate the near GBP30M of start-up losses by the end of '11/'12 is also welcome," it adds. Says the shares should take the news well. Has the stock at add, with 130p price target. Shares closed Tuesday at 117p. ([email protected]) 0621 GMT [Dow Jones] The levy on banks imposed by the UK Chancellor is not as bad as expected and there is the further relief in the form of an unexpected cut in the corporate tax rate, says Citigroup. Lloyds Banking Group (LLOY.LN) is the clear winner in the budget. It estimates the net effects on Lloyds' FY '12E earnings will be an increase of GBP132M. Other banks will suffer small negative net hits to FY '12 attributable earnings; GBP36M for Standard Chartered (STAN.LN), GBP52M for Royal Bank of Scotland (RBS.LN), GBP52M for Barclays (BARC.LN) and GBP83M for HSBC (HSBA.LN). Lloyds shares could rally strongly from here over the next few weeks. Lloyds rated buy. Shares closed Tuesday at 59p. ([email protected]) 0619 GMT [Dow Jones] The VAT increase announced by the UK Chancellor will benefit UK water and energy networks, says Deutsche Bank. Says the increase will be a benefit for the regulated networks since it will feed through to inflation via the retail price index. Says the government's revised RPI forecasts look extremely attractive and would imply asset base and earnings growth for the UK water and energy networks in excess of what is currently reflected in share prices or consensus estimates. Notes though RPI inflation benefits may be slightly offset by reductions in capital allowances for investment in plant and machinery. ([email protected]) 0612 GMT [Dow Jones] Citigroup lifts Whitbread (WTB.LN) price target to 1700p from 1645p following the company's 1Q update. Citigroup raises its '11 EPS forecast to 104.7p from 99.7p and its '12 EPS estimate to 114.9p from 109.5p to reflect the strong 1Q performance at Premier Inn. However "Whitbread's capital-heavy rollout model absorbs considerable free cash flow, which reduces our valuation upside. Combined with the more limited international exposure and lower operational gearing, this leads us to retain our hold rating." Shares closed Tuesday at 1531p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 23, 2010 04:33 ET (08:33 GMT)