UK MARKET TALK ROUNDUP: BROKERS COMMENTS

11th Jun 2010 09:46

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] 0846 GMT [Dow Jones] Fuller, Smith & Turner (FSTA.LN) continues to deliver an admirable performance, says Panmure Gordon. FY results are ahead of expectations, with pretax profit of GBP26.6M versus Panmure's estimate of GBP25.8M, says Panmure. It notes a strong annual dividend increase of 12% to 11p. "Fuller's continues to offer a rare and compelling combination of earnings and dividend growth, is conservatively financed, and offers good forecast upgrade potential." Reiterates buy recommendation and has 614p target. Shares +6.4% at 580p. ([email protected]) 0755 GMT [Dow Jones] Royal Bank of Scotland raises Premier Farnell (PFL.LN) price target to 275p from 260p following much better than expected 1Q results. Notes strong sales growth and margin improvement in all regions. "With May and June 2009 representing the trough during this cycle in terms of sales per day, the improving momentum currently being seen is not surprising, although its magnitude is greater than we expected." Expects the strategy to drive further outperformance. Keeps the stock at buy. Shares -1.7% at 240p. ([email protected]) 0655 GMT [Dow Jones] The approach for Brit Insurance Holdings (BRE.LN) should help the share price Friday, although this should not be taken as a definite signal that a deal is imminent or that a bidding war may start, says Execution Noble. Says the attraction of Brit is clearly its high dividend yield as well as the low valuation. Welcomes the interest back into the sector, given the brokerage's view that these stocks are significantly undervalued. Says: "This sudden introduction of bid speculation into the sector will clearly benefit all, particularly given the lowly valuations of not just Brit but the whole Lloyd's [of London] space." Keeps Brit at hold. Shares closed Thursday at 729p.([email protected]) 0650 GMT [Dow Jones] The approach by a private equity group to acquire Brit Insurance Holdings (BRE.LN) is good for the sector as a whole, says an analyst. Says if there is a resumption of interest in the sector, it should be positive for valuations even if the deals don't end up going through. Meanwhile, ahead of the open, a trader calls Brit Insurance up by around 3%. Shares closed Thursday at 729p. ([email protected]) 0645 GMT [Dow Jones] Hammerson's (HMSO.LN) acquisition of Leadenhall Court increases the size of the company's portfolio by only about 1%, so it is not material for forecasts, says KBC Peel Hunt. Says the building is let to March '14 and the passing rent of GBP7.2M implies an initial yield of 11%. Has Hammerson at buy with target price of 454p. Shares closed on Thursday at 358.5p. Elsewhere, says there could be a knock-out bid for the entire White Tower Portfolio, of which the Leadenhall Court city office building formed a part. ([email protected]) 0642 GMT [Dow Jones] Investec cuts its price target on Imperial Tobacco Group (IMT.LN) to 2010p from 2040p, and keeps its hold rating. Says Imperial Tobacco's shares are back around the 1900p level after a torrid April/May. Cites weak industry volumes, the loss of the OFT case, and the threat of plain packaging. Remains cautious on the stock and the sector, but thinks these fears have been overdone. Still, tweaks forecasts in the light of 1H numbers and subsequent movements in the forex markets. Says this leads to a small downgrade to FY '10 EPS estimate in actual forex, but an around 2% upgrade at constant forex. Says its long-term forecasts reduce by around 3%, principally for more adverse forex movements. Shares closed at 1897p. ([email protected]) 0633 GMT [Dow Jones] Barclays Capital upgrades GlaxoSmithKline (GSK) to overweight from equalweight, and keeps its price target at 1380p. Says investor concerns around Avandia and Advair are overdone. Adds the stock seems cheap with a dividend yield of 6.2%, a free cashflow yield of 12%, and 17% upside to BarCap's DCF valuation. Says in this climate boring is beautiful. Shares closed at 1164p. ([email protected]) 0626 GMT [Dow Jones] Morgan Stanley upgrades Reed Elsevier (REL.LN) to overweight from equalweight. Also lifts the price target by 20% to 600p, implying 24% upside. Says the stock is facing some late-cycle headwinds in '10 but improving underlying market conditions suggest a strong bounce-back in '11-'12. Thinks it is a good quality business with improved management. Says outperformance could be triggered by avoiding earnings downgrades in the interim results in July. Shares closed Thursday at 484p. ([email protected]) 0622 GMT [Dow Jones] Goldman Sachs downgrades Rexam (REX.LN) to neutral from buy. Sees more upside in other names in the sector. But raises the price target to 527p from 474p. Views Rexam as a high quality, high returns-generating company, supported by valuation. Also, the brokerage has a more positive view on beverage can volumes. Adds that the increase in the price target implies 68% potential upside. Shares closed on Thursday at 317.3p. ([email protected]) 0610 GMT [Dow Jones] UBS upgrades Dana Petroleum (DNX.LN) to buy from neutral. Says Dana has underperformed the sector by 12% year-to-date. But sees potential for near-term catalysts, with a high-impact exploration well due to spud in the next few weeks, the sanction of two significant UK projects and a weaker sterling offsetting somewhat weaker oil prices. Sees a strong valuation case for the company. Maintains 1300p price target. Shares closed on Thursday at 1044p. [email protected]) 0609 GMT [Dow Jones] HSBC upgrades Eurasian Natural Resources (ENRC.LN) to overweight from neutral but cuts the price target to 1230p from 1260p. Thinks its recent sell off, in line with the sector, is unjustified. Says the market has yet to realize ENRC's strong organic growth profile and M&A potential, nor credit the company with its ability to implement both. Elsewhere, says that ENRC is a unique beneficiary of power supply issues in South Africa. Shares closed on Thursday at 1026p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 11, 2010 04:46 ET (08:46 GMT)