UK MARKET TALK ROUNDUP: BROKERS COMMENTS -2-

10th Jun 2010 10:49

0719 GMT [Dow Jones] UBS Wealth Management says any move by gold below $1,200/oz represents a buy opportunity with the yellow metal likely to trade around $1,500/oz in 12 months time. "Of course, any sharp intensification of the sovereign debt crisis in Europe could propel the gold price even higher, but downside risks should not be discarded lightly either," says report. UBS says prefers "unhedged, physically-backed positions over equities and paper investments in gold." Spot gold at $1226.90/oz, down $6.20 since NY close. ([email protected]) 0745 GMT [Dow Jones] BP (BP) -5.9% at 368p, continuing to be pressured by the circumstances surrounding the Macondo spill. The uncertainty surrounding the dividend is also weighing, says Morgan Stanley and the share price reaction is telling BP's board to show its hand quickly, rather than waiting for the 2Q results on July 27, both on the payout policy and to provide a clearer line on the payment of future liabilities. Morgan Stanley says investors also want to see the board reiterate confidence in the management team. It says clarity on these issues should support a significant bounce away from its 320p-365p/share bear case range. Overweight rating, 600p target. 5-yr CDS widen to 552 bps, from a close in NY of 386 bps, but Morgan Stanley points to $15B of short-term cash lines. ([email protected]) 0716 GMT [Dow Jones] Results for Argos in Home Retail Group's (HOME.LN) 1Q trading statement are disappointing and a lot worse than expected says Seymour Pierce. The figures are impacted by weak game and TV sales. Seymour says the Argos results are worrying given that competition is intensifying, particularly from the food retailers. In contrast, Homebase figures are a little better-than-expected. Still, the brokerage says there are more compelling investment opportunities in the sector. It reiterates a sell rating because of the potential for downgrades to earnings forecasts although it maintains there is now limited downside to the shares. Shares -4.7% at 227p.([email protected]) 0653 GMT [Dow Jones] The acquisition by Centrica's (CNA.LN)North American subsidiary Direct Energy of Clockwork Home Services should be positive for the Centrica share price, says an analyst. Says the deal shows that Centrica is following the same successful strategy it has displayed in the UK. Says the acquisition of Clockwork will make Direct Energy a market leader in the North American home energy services market. Centrica shares closed Wednesday at 277.9p. ([email protected]) 0652 GMT [Dow Jones] Royal Bank of Scotland initiates coverage of Paragon Group (PAG.LN) at buy with a 200p price target. RBS says the 1H '10 results underline the quality of the loan portfolio. It thinks the group looks in a strong position financially and the loan portfolio continues to perform well, with arrears rates well below the market average. A return to lending in any material way looks to be much closer to becoming a reality, says RBS, adding that management has given the strongest message yet that it is close to accessing a warehouse facility, which would in turn allow Paragon to tap the securitization markets. Shares closed Wednesday at 130.8p.([email protected]) 0650 GMT [Dow Jones] Home Retail's (HOME.LN) 1Q results are in line with forecasts overall, but sales at Argos are disappointing, says Shore Capital analyst Kate Calvert. Says sales at Homebase are a little better than forecasts and indicated the group has taken market share. However, says the group's outlook, although in line with consensus, will disappoint investors. Buy rating. Shares closed Wednesday at 238p. ([email protected]) 0649 GMT [Dow Jones] Halfords' (HFD.LN) FY '10 results are modestly ahead of expectations says Execution Noble. Notes management's target of delivering average annual EPS growth of 15% going forward. Says Halfords remains one of the best placed retailers under the brokerage's coverage showing continued earnings growth both organic and through acquisition. Says the balance sheet is strong. Says the shares have had a strong run but thinks a calendar '11E P/E of just 10.4x does not look expensive. Keeps at buy. Shares closed Wednesday at 500p. ([email protected]) 0642 GMT [Dow Jones] Premier Farnell'S (PFL.LN) 1Q results are well ahead of expectations, say KBC Peel Hunt. Says the beat at pretax profit and EPS level is due to strong sales growth in all regions, combined with the impact of operational gearing from its recent restructuring. Thinks Premier Farnell's US exposure will work in its favor while the euro zone's economic conditions look uncertain. The name is KBC's preferred play in the sub-sector. Has a buy recommendation, with 250p target price. Shares closed Wednesday at 219.6p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 10, 2010 05:49 ET (09:49 GMT)