UK MARKET TALK ROUNDUP: BROKERS COMMENTS

8th Jun 2010 14:28

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] 1328 GMT [Dow Jones] The recent share price weakness in Renold (RNO.LN) is an opportunity to pick up the stock says David Buxton, analyst at FinnCap. He adds that with considerable operational gearing even on a lackluster economic recovery, profits should see considerable upside. Renold reported Tuesday a pretax loss of GBP13.6M for the year to March 31, compared with a profit of GBP2.9 million for the prior fiscal year. Buy rating, 60p fair value. Shares -11% at 25p.([email protected]) 1120 GMT [Dow Jones] The risk that any of Tesco's (TSCO.LN) top team will leave the company in the near term is very low, says Deutsche Bank. It doesn't think there is significant disquiet on the Tesco board amongst those not given the CEO job. Amongst those thought to have been front-runners for the CEO role, Deutsche says Andrew Higginson seems to be enjoying his new role as CEO of services, Tim Mason has been given the deputy CEO role and still has a lot on his plate with the US, and Richard Brasher has been given the UK CEO role, which is a "massive and high-profile job." Buy rating, 480p target. Shares -3.3% at 394p.([email protected]) 1016 GMT [Dow Jones] Goodbody Stockbrokers upgrades Elan (ELN) to reduce from sell, with a price target of $5.05. "The most significant near-term catalyst for Elan's share price will be the outcome of the FDA Committee meeting on Novartis' (NVS) oral MS drug Gilenia on June 10," the brokerage says. "If the committee recommends approval, it will have a negative impact on companies with existing MS treatments, including Elan." Shares -5.9% at EUR4.42. ([email protected]) 1012 GMT [Dow Jones] KBC Peel Hunt upgrades Vectura Group (VEC.LN) to buy from hold following the drug maker's decision to seek partners to help it develop generic asthma medicine VR315 in the US. Analyst Paul Cuddon says the company previously indicated it wanted to go it alone after European partner Novartis (NOVN.VX) pulled out, but securing a partner will likely enable Vectura to cut VR315 development costs and should increase the product's chances of successfully getting to market. Target price rise to 70p from 45p. Shares flat at 38p. ([email protected]) 0957 GMT [Dow Jones] Evolution Securities cuts its BP (BP) target price to 580p from 700p to reflect what it believes to be the realistic cost of the Deepwater Horizon accident. Still, it keeps a buy rating. It says the 35% drop in share price looks around $53B more than its current estimate for clean up costs, so does this mean the perpetuity value of unknown litigation costs, foregone dividends and other penalties equate to over $50B? Evolution says the global insurer, Willis Group Holdings, estimates the final bill may total $30B, half the market value lost by BP. Shares -2.7% at 418p. ([email protected]) 0947 GMT [Dow Jones] Panmure Gordon upgrades Hyder Consulting (HYC.LN) to buy from hold and raises price target to 313p from 291p following the company's better-than-expected FY results. Adjusted pretax profit is around 5% ahead of the brokerage's forecast. Panmure adds that cash generation is particularly impressive, leaving the company with GBP3.6M of cash on the balance sheet. To account for the strong trading patterns and cash generation, Panmure raises its '11E adjusted pretax profit estimate to GBP18.3M from GBP17M. It says the stock has 17% upside potential and a 2% yield. Shares -2% at 270p. ([email protected]) 0825 GMT [Dow Jones] London & Stamford Property's (LSP.LN) GBP27.5M residential acquisition is a relatively modest but welcome addition to the portfolio, says KBC Peel Hunt. Says the deal looks inexpensive at GBP517 per square foot, and in today's markets is an easy yield-accretive letting prospect. Keeps a buy rating. Shares +0.2% at 120p. ([email protected]) ("MARKET TALK: Aggreko Update Highlights Progress -Altium," at 0712 GMT, misstated the price target and omitted the change in the price target. The correct version follows:) 0712 GMT [Dow Jones] Aggreko's (AGK.LN) interim management statement highlights the progress the business has made since the last update to the market on April 16 says Altium. It says underlying 1H growth is now expected to hit the 10% mark, while the outlook will be significantly better than expected in April, based on local businesses' underlying improvement, the extension of the World Cup contract to the domestic area and currency effects. Buy recommendation, target price raised to 1600p from 1350p. Shares +4.0% at 1407p. ([email protected]) 0712 GMT [Dow Jones] Aggreko's (AGK.LN) interim management statement highlights the progress the business has made since the last update to the market on April 16 says Altium. It says underlying 1H growth is now expected to hit the 10% mark, while the outlook will be significantly better than expected in April, based on local businesses' underlying improvement, the extension of the World Cup contract to the domestic area and currency effects. Buy recommendation, 1550p target. Shares +5.2% at 1425p. ([email protected]) 0700 GMT [Dow Jones] Goldman Sachs upgrades Weir Group (WEIR.LN) to buy from neutral and lifts the price target to 1447p from 1070p. Says Weir offers attractive exposure to the mining and minerals industries and gas and power generation sectors. Says this should allow the company to enjoy above average structural growth over the next cycle. With Weir shares are trading at an unwarranted discount to the sector on EV/EBIT and PE on '10 and '11 forecasts, thinks the current share price offers an attractive entry point. Shares closed Monday at 894p. ([email protected]) 0656 GMT [Dow Jones] WH Smith (SMWH.LN) offers a sales update in line with expectations, says Shore Capital and thus there is unlikely to be any changes to consensus pretax profit estimates. Says WH Smith is a well run, defensive company with a strong balance sheet and good cash generation. Shore adds WHS's shares are trading on an undemanding valuation and are yielding an attractive 4.1%. Hence, keeps a buy recommendation. Shares closed Monday at 454p. ([email protected]) 0646 GMT [Dow Jones] Aggreko's (AGK.LN) trading statement is significantly ahead of expectations says an analyst. Says demand remains strong and highlights good revenue growth for international power projects in the first half, with strong margins. Says management expects 1H sales to have risen 10% on a constant currency basis with trading profit ahead by about 20%. Shares closed Monday at 1354p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 08, 2010 09:28 ET (13:28 GMT)