UK MARKET TALK ROUNDUP: BROKERS COMMENTS -2-

25th Jun 2010 11:27

0803 GMT [Dow Jones] Exane BNP Paribas cuts National Grid (NG.LN) price target by 6% to 645p to reflect the adjusted number of shares after the rights issue. Also takes into account that National Grid went ex-dividend on June 2. After the rights issue, estimates NG's financing needs are covered until March '12, allowing it to maintain its target of an 8% annual increase in the dividend until then. "The GBP22B capex plan will...improve the group's profile as supportive UK regulation should enable the group to maintain its returns above the cost of capital," adds Exane. Keeps the stock at outperform. Shares +0.2% at 503p. ([email protected]) 0720 GMT [Dow Jones] Morgan Stanley downgrades Halfords (HFD.LN) and Kingfisher (KGF.LN) to equalweight from overweight; it keeps its Halfords target at 540p but cuts Kingfisher to 225p from 240p. Even before the budget, there were signs UK consumer spending was under pressure, notes Morgan Stanley. It says the combination of tax rises and growing public sector unemployment looks set to make things worse. Morgan Stanley also downgrades WH Smith (SMWH.LN) to underweight from equalweight and cuts the target to 400p from 455p. And it downgrades Next (NXT.LN) to equalweight from overweight although it raises its target to 2250p from 2160p. The bank says overall consensus forecasts for FY'11/'12 are too high and it cuts its own forecasts by around 10%. The new target prices don't leave enough upside to remain overweight Kingfisher or Halfords, notes the bank. It trims DSG International (DSGI.LN) price target to 24p from 27p, Kesa Electricals (KESA.LN) to 100p from 105p Go-ahead target to 1250p from 1275p - all underweight. The bank cuts Home Retail Group (HOME.LN) to 230p from 275p and Marks & Spencer (MKS.LN) to 325p from 340p - both equalweight. Debenhams (DEB.LN) target goes to 72p from 85p - overweight. ([email protected]) 0712 GMT [Dow Jones] Goldman Sachs adjusts target prices on online gaming stocks. Raises Paddy Power (PLS.DB) price target to EUR30 from EUR28.6, noting the company's strong trading as reported in its May update. Cuts Partygaming (PRTY.LN) price target to 316p from 320p to reflect the adverse EUR/USD and GBP/USD exchange rates and lower expectations for networking services in '10 and '11. Nudges down Sportingbet (SBT.LN) target to 80p from 82p following the company's 3Q results and to account for the loss of revenues in France. Has all three stocks at neutral. ([email protected]) 0706 GMT [Dow Jones] Berkeley Group's (BKG.LN) FY results against a backdrop of resilient pricing generates pretax profit of GBP110.3M, around 3% ahead of Shore Capital's forecast. Shore says the company has a strong cash position and is well placed to continue buying land at attractive prices. Shore maintains a buy rating and expects the company's NAV to rise strongly in the medium term. Shares +1.4% at 812p. ([email protected]) 0657 GMT [Dow Jones] Nomura downgrades BT Group (BT.A.LN) to reduce from neutral, but nudges up the price target to 150p from 145p. Strong momentum on cost reduction allows the company to give clear guidance to '13, says Nomura. However, the good news is mostly priced-in, says the brokerage. "Consensus forecasts [are] quick to discount the upbeat message and recent favorable regulatory moves on pricing." Also, BT has one of the worst revenue growth outlooks in the sector, says the brokerage. It adds that with no more compulsory headcount cuts until the end of '11, BT will struggle to grow Ebitda. On top of this, uncertainty on the dividend outlook will linger. Shares closed Thursday at 132p.([email protected]) 0647 GMT [Dow Jones] Credit Suisse trims Henderson Group (HGI.LN) price target to 195p from 200p. Reduces earnings estimates by 2%-3% throughout the forecasting period, in line with the weaker markets witnessed over the past few months. Also, is analyzing the company's trends for retail assets under management for the month to May 31 '10. Says overall, retail funds are down 4.1% on the previous month, though ahead of both the FTSE 100 and S&P 500. Keeps the rating at outperform. Shares closed on Thursday at 124p. ([email protected]) 0643 GMT [Dow Jones] UBS raises Petrofac (PFC.LN) target price to 1375p from 1350p following the company's 1H update. Says it showed continued confidence in the successful growth of the business. The bidding pipeline remains strong and performance on existing contracts is in line with management's expectations, UBS adds. Raises FY'11 EPS estimate to $135.5 from $134. Keeps the stock at buy. Shares closed Thursday at 1223p. ([email protected]) 0637 GMT [Dow Jones] Goldman Sachs cuts Micro Focus International (MCRO.LN) price target to 510p from 620p to reflect potential execution risks. Says the departure of CFO Nick Bray is a big setback, and despite the sharp fall in the shares does not believe risk-reward is compelling. Notes Bray was one of the key architects of the turnaround post IPO, and had been an important pillar in the execution of the organic growth. "With a new CEO...and still lots to do in terms of the go-to-market model, we are mindful of short-term execution risks." Keeps the stock at neutral. Shares closed Thursday at 460p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 25, 2010 06:27 ET (10:27 GMT)