UK MARKET TALK ROUNDUP: BROKERS COMMENTS -3-

19th Jul 2010 10:54

0658 GMT [Dow Jones] UBS raises Burberry Group (BRBY.LN) target price to 790p from 730p, following the company's announcement that it will buy out its Chinese franchisees. UBS sees this transaction as very positive for Burberry, given that it allows the group to directly operate its business in what is currently the Luxury sector's key market. Says the deal is expected to close in September, but its impact on FY '11 earnings will be broadly earnings neutral. "In FY '12, however, the transaction is expected to add approximately GBP20M to operating profit as Burberry starts focusing on implementing productivity improvements," adds UBS. Has a neutral rating on the stock. Shares closed at 800p. ([email protected]) 0658 GMT [Dow Jones] The merger of the assets of International Power (IPR.LN) and GDF-Suez (GSZ.FR) has limited upside for shareholders in the former company, says Evolution Securities analyst Lakis Athanasiou. "There are obvious costs synergies," that could be worth 30 pence a share for the combined company and a weaker strategic rationale, he says. International Power has had limited success in the Middle East and may benefit from better French relationships there, he adds. However, there is a big downside for International Power investors in that they become minority shareholders in a French-controlled company, he says. International Power shares closed at 317p. ([email protected]) Contact us in London. [email protected] 0657 GMT [Dow Jones] Citigroup raises its ARM Holdings (ARM.LN) target price to 225p from 210p to reflect a stronger a dollar. Nonetheless, it keeps a sell rating. It says the expansion of the FY11 P/E multiple to 30x from 19x over the last 12 months [versus European Technology sector P/E expansion to 14.5x from 10.1x] suggests ARM's valuation has run well ahead of fundamentals. "Bid speculation has been a significant factor in recent multiple expansion but we do not believe ARM will be acquired. At these levels, we see ARM struggling to outperform on a 12-month view," it adds. Shares closed Friday at 304p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 19, 2010 05:54 ET (09:54 GMT)