UK MARKET TALK ROUNDUP: BROKERS COMMENTS

18th Jun 2010 07:49

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] 0649 GMT [Dow Jones] UBS cuts Anglo American (AAL.LN) price target to 3150p from 3250p. Says it has lowered its realized coal price forecasts for Anglo's South African coal assets, given the lag between spot and realized prices. Also says it had been too optimistic on copper earnings, and lowers copper volumes for '10. UBS raises its copper cash costs based on diesel and labor cost pressure and removes the zinc assets from 2H'10. Shares closed Thursday at 2673p. ([email protected]) 0648 GMT [Dow Jones] The structure of BP's (BP.LN) escrow fund and the aggressive capex cut/disposal program will allow BP to manage the cash outflow from the Gulf of Mexico damages without needing to raise new capital, says Goldman Sachs. However, it does not clarify the total size of the damages, as the escrow fund does not represent a cap to BP's liabilities in the area. Goldman says the total damage range remains highly uncertain and includes $34B of liabilities in its valuation. "Although we believe that the risk-reward of BP shares is currently tilted to the upside, we maintain a neutral rating as we continue to see a better risk-reward in our conviction buys, Royal Dutch Shell (RDSA.LN) and Statoil (STL.OS)." Has 580p price target on BP. Shares closed Thursday at 360p. ([email protected]) 0645 GMT [Dow Jones] UBS downgrades Game Group (GMG.LN) to neutral from buy, and cuts its target price to 80p from 120p. Says the company's trading update indicates weak like-for-like sales as expected, but gross margin the main concern, now -100 basis points for FY11 from previous flat guidance suggesting a significant price realignment due to greater competitive pressures. Adds that an improvement in the 2H like-for-like run rate is critical. "We assume a slower like-for-like decline based on two year comparatives being 20% softer," adds UBS. Shares closed at 83p. ([email protected]) 0643 GMT [Dow Jones] UBS raises Tate & Lyle (TATE.LN) price target to 515p from 460p to reflect favorable currency effects and lower debt/pension deficit, following the company's solid FY'10 results. Notes another beat on cash flow. Says year end net debt fell by GBP370M to GBP814M, as the management have reined back capex and focused efforts on reducing working capital. Keeps the stock at neutral. Shares closed Thursday at 497p. ([email protected]) 0635 GMT [Dow Jones] Societe Generale upgrades BP (BP.LN) to buy from hold, after the company agreed to an independently managed claims fund and dividend freeze in response to oil spill. Says this improves visibility on BP's eventual accident-related costs and the market will increasingly start discounting a neutral case rather than the most pessimistic scenario. However, reduces price to 495p from 530p, noting that for the next 12 months, "the share price will likely stay volatile and BP will remain a high risk/high potential reward investment with no guarantee of resumed dividends in 2011." Shares closed at 360p. ([email protected]) 0634 GMT [Dow Jones] UBS raises Heineken (HEIA.AE) target price to EUR39 from EUR37 given the recent weakness of the euro. UBS says the brewer is a beneficiary of the weakness of the euro in terms of translation with some transactional benefit from its US import business. UBS reiterates a neutral rating. Shares closed EUR36.42 Thursday. ([email protected]) 0633 GMT [Dow Jones] Morgan Stanley downgrades Hikma Pharmaceuticals (HIK.LN) to equalweight from overweight but raises price target to 750p from 700p. The bank says a Middle East and North Africa site visit confirmed fundamentals, but MS says the scope for upgrades is limited and the potential risk of dilution leads to the downgrade. The bank asumes $300M is spent on MENA acquisitions, but the probability of Hikma issuing equity to part-fund any deal has increased. Shares closed Thursday at 675p. ([email protected]) 0627 GMT [Dow Jones] UBS upgrades William Hill (WMH.LN) to buy from neutral. Says that since the end of March 2010, the stock is down 15%, which is unjustified. "Based on our FY'11 estimates the stock is now trading on PE circa 8x and offers a cash flow yield of over to 9%," it says. Adds that post rights issue, "there are no significant balance sheet concerns." Has a 215p target price. Shares closed at 178p. ([email protected]) 0614 GMT [Dow Jones] Goldman Sachs downgrades WS Atkins (ATK.LN) to neutral from buy following the stock's recent outperformance, as a result of which the potential upside implied by the brokerage's price target is now below the median of its coverage universe. Notes the company reported mixed FY'10 results, with sales 7% below Goldman's estimate but Ebit 10% ahead. Has a 6-month price target of 836.4p. Shares closed Thursday at 696p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 18, 2010 02:49 ET (06:49 GMT)