UK MARKET TALK ROUNDUP: BROKERS COMMENTS -2-

16th Jun 2010 09:56

0653 GMT [Dow Jones] Shore Capital cuts its pretax profit forecast on Home Retail (HOME.LN) by 8% to GBP292 million and assumes a weaker sales environment for its two businesses, Argos and Homebase. "Argos has had a difficult start to the year, impacted by weakness in two significant product categories, namely televisions and gaming," analyst Kate Calvert says. However, Calvert says the intrinsic value of the stock remains attractive. Buy rating. Shares closed Tuesday at 231 pence. ([email protected]) 0653 GMT [Dow Jones] ING raises British Sky Broadcasting (BSY.LN) target price to 765p from 700p following News Corp's (NWS) offer to buy out the shares it does not already own in the company. ING says long-term shareholders will rightly want to see more upside in the shares considering that any merger is likely to take over 12 months to close. "Our 830p [target price] upside scenario is consistent with the position taken by BSkyB's independent non-executives who would consider bids above 800p," ING adds. Buy rating. News Corp, which owns Dow Jones & Co., the publisher of this newswire, has a stake of about 39% in BSkyB. Sky Shares closed at 700p. ([email protected]) 0648 GMT [Dow Jones] Citigroup upgrades Drax Group (DRX.LN) to hold from sell, and increases its target price to 405p from 395p. Says the upgrade is to reflect both the improving commodity price environment for UK coal-fired generators, and latest forward contracting positions and guidance. "UK forward gas prices have rallied strongly recently, with year forward gas up 29% since April, driving up the corresponding base load power price by 23%," it adds. Shares closed at 384p. ([email protected]) 0648 GMT [Dow Jones] JPMorgan Cazenove downgrades BHP Billiton (BLT.LN), Fresnillo (FRES.LN) and Lonmin (LMI.LN) to underweight from neutral. For BHP, the rating cut reflects the stock's valuation premium against peers and lack of operational and financial leverage to any one commodity, says JPM. For Fresnillo, JPM says the stock's starting to look fully-valued after a strong run over the past few weeks. For Lonmin, "we are concerned that operational issues may prevent the company from fully taking advantage of platinum group metal price rises going forward, combined with premium valuation and uncertainty over Xstrata's (XTA.LN) intentions." 2000p target on BHP, 990p on Fresnillo and 1550p on Lonmin. ([email protected]) 0645 GMT [Dow Jones] J Sainsbury's (SBRY.LN) 1Q like-for-like sales of 1.1% excluding petrol but including VAT, are slightly below Execution Noble's estimate of 1.5%, the brokerage says. However, its estimate was ahead of consensus. Execution prefers either Tesco (TSCO) or Morrison (MRW.LN), with 22% and 35% upside to the brokerage's respective fair values respectively. Sainsbury rated at hold. Shares closed Tuesday at 324p. ([email protected]) 0643 GMT [Dow Jones] Citigroup upgrades Aggreko (AGK.LN) to buy from hold, and lifts its target price to 1733p from 1450p. Says the investors' trip to Africa highlighted the sheer magnitude of opportunity which Aggreko has over the short, medium and long run in temporary power. "We think there are many years of growth in prospect," it says. Also thinks the company has developed a virtuous cycle "based on its excellent brand, reputation, capital investment and profitability." Shares closed at 1445p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 16, 2010 04:56 ET (08:56 GMT)