UK MARKET TALK ROUNDUP: BROKERS COMMENTS

9th Jun 2010 07:44

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] 0644 GMT [Dow Jones] Goldman Sachs adjusts ratings on UK capital goods stocks in its latest sector review, upgrading Weir Group (WEIR.LN) to buy from neutral, but cutting Bodycote (BOY.LN) and Morgan Crucible (MGCR.LN), both to neutral from buy. Says while macroeconomic uncertainty remains, we believe capital goods company earnings should continue to benefit from restructuring savings, strong near-term industrial production, potential for inventory rebuild in end markets, reversal of 2009's underproduction, and recovery of fixed investment from current low levels. In terms of target prices, Goldman lifts Weir Group target price to 1447p from 1070p, and Bodycote target to 290p from 274p. Cuts Morgan Crucible target to 250p from 254p. ([email protected]) 0640 GMT [Dow Jones] Autonomy's (AU.LN) acquisition of CA Technologies' (CA) Information Governance business is unlikely to have any impact on forecasts says a trader and will be immaterial to FY '10 profits. Says the main product acquired, which captures and manages messages according to corporate and regulatory requirements, will bring additional functionality to Autonomy's current product offering. Notes that the terms of the sale were not disclosed. Autonomy's shares closed on Tuesday at 1768p. ([email protected]) 0627 GMT [Dow Jones] Morgan Stanley downgrades Great Portland Estates (GPOR.LN) and Derwent London (DLN.LN) both to equalweight from overweight on valuation grounds. But lifts Great Portland target price to 320p from 280p, and Derwent target to 1390p from 1330p. Says on average tomorrow's property deal is unlikely to happen at a yield that is lower than yesterday's deal, while occupational markets will undoubtedly remain under pressure, other than for London offices. Expects a protracted period of broadly flat real capital values. Great Portland shares closed at 280.5p, and Derwent at 1300p. ([email protected]) 0626 GMT [Dow Jones] UBS upgrades Wolseley (WOS.LN) to buy from neutral and lifts the target price to 1900p from 1872p. It says Wolseley is likely to benefit from relatively high exposure to the US, it has bottomed in housing and is seeing signs of stabilization in non-residential. UBS adds that in the UK the company is experiencing improving merchanting trends and the company will also benefit on a comprehensive restructuring program across its divisions. "Although margin pressure is likely to persist in most end markets, we do not believe these will be sufficient to pose significant downside risks to earnings," adds UBS. Shares closed Tuesday at 1524p. ([email protected]) 0623 GMT [Dow Jones] UBS initiates coverage of Prudential (PRU.LN) with a buy rating and 641p price target. Says the valuation is attractive relative to Asian peers. Also points to the group's strong operational record and the likelihood it will recover from the current depressed sentiment in the wake of the failed AIA deal. Says: "The problems surrounding the AIA deal do not affect the fact that the group performed strongly during the bear market, pro-actively defending its balance sheet strength, demonstrating impressive control of guarantee and investment risk and maintaining operating earnings momentum." Expects this strategy to continue. Shares closed at 525p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 09, 2010 02:44 ET (06:44 GMT)