UK MARKET TALK ROUNDUP: BROKERS COMMENTS

29th Jul 2010 08:17

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] 0717 GMT [Dow Jones] Rank Group's (RNK.LN) 1H results are in line with previous expectations on an operating basis and slightly ahead on interest and tax, says Investec. It lifts '10 EPS forecast by 2.2% to 9.2p, its fifth EPS upgrade in just over a year. In the medium-term, Investec sees continued investment driving both volumes and spend across each division. "Moreover, regulatory risk is now marginally on the upside given Conservative Party proposals on gaming machines," adds Investec. Buy rating, 137p target. Shares +2.3% at 111.7p. ([email protected]) 0716 GMT [Dow Jones] Kazakhmys (KAZ.LN) production is "humming along well," says Anindya Mohinta of Citigroup, after the company reported "a steady and stable set of 1H 10 production numbers." Copper production was 11% higher than Citi's estimates. "Copper in concentrate and cathode volumes were impacted positively by processing of stockpiled ore inventories, an effect the company suggests will not be seen in 2H10." The bank says that the incremental 25,000 ton of copper production if marked at spot copper prices would increase its FY10 sales estimate by 6.6%. Citi has a 2M rating on the stock. Kazakhmys +0.7% at 1205p. ([email protected]) 0712 GMT [Dow Jones] National Express's (NEX.LN) 1H results are slightly ahead of Shore Capital's expectations, with pretax profit coming in at GBP75.7M versus expected GBP68.7M. Notes the group has indicated that the dividend will be resumed by the year end, subject to trading. Notes UK bus and US schools reported margin improvements in 1H. However, keeps hold rating, saying the margin improvement is already factored into forecasts. Shares -0.8% at 241p. ([email protected]) 0702 GMT [Dow Jones] BSkyB's (BSY.LN) FY adjusted operating profit of GBP855M is in line with consensus and adjusted basic EPS of 31.1p 2% ahead of consensus says Royal Bank of Scotland analyst Paul Gooden. Key Performance Indicators are "a bit mixed," with high-definition adds of 429,000 vs consensus of 403,000, net adds of 90,000 vs consensus of 109,000, average revenue per user at GBP508 vs consensus of GBP514. Churn rate is at 10.5% vs consensus of 9.8%. And dividend rises by 10% vs expectation of a 5% rise, Gooden says. Hold rating, 695p target. News Corp, which owns Dow Jones & Co, the publisher of this newswire and The Wall Street Journal, has a 39.1% stake in BSkyB. Shares flat at 720p.([email protected]) 0659 GMT [Dow Jones] Inchcape's (INCH.LN) 1H results are even better than the previously raised expectations, says Nick Bubb at Arden Partners, with pre-exceptionals pretax profit up 76% on last year--at GBP115M, more than GBP20M higher than most forecasts. Says trading has been strong across the board, but, despite the hype about Russia, the best performance has in fact come in Australia and Asia and the UK. Maintains a buy rating, and lifts its target to 360p from 300p. Also raises FY '10 EPS forecast to 30p from 25.9p, and FY '11 EPS to 33.4p from 29.6p. Shares closed at 313p Wednesday. ([email protected]) 0654 GMT [Dow Jones] Royal Dutch Shell's (RDSB.LN) 2Q10 earnings are strong, with cash flow from operating activities at $8.1B, compared to $0.9B in 2Q09, a trader says. Says the $8.1B cash flow for 2Q, covered the combination of total net capex of $5.5B and dividends of $2.5B. "Much of the growth in cash flow is still to come - Shell is targeting 80% growth in cash flow in 2012 versus 2009 at $80/bbl, which implies around $43B of cash flow in 2012," adds trader. Says that balance sheet gearing was 16.9% versus 17.1% at end-2Q. Also notes that the quarterly dividend has been maintained at $0.42 per share. Shell shares closed at 1707p. ([email protected]) 0651 GMT [Dow Jones] UBS upgrades European equities to neutral from underweight, positioning for a more positive tone. Cites valuation, saying not only does Europe offer a higher dividend yield than the Global or US markets but it also boasts the biggest gap - of 1.1% - between its 12 month forward dividend yield of 4.1% and its 20 year average yield of 3.0%. Adds economic surprises in Europe have been plentiful, while the stress tests and the Basel III announcements remove some uncertainty. ([email protected]) 0651 GMT [Dow Jones] BT Group (BT.A.LN) reports a solid 1Q update, says Mandeep Singh at Berenberg Bank, with group revenues a little better than expected and Ebitda 2% ahead of consensus. Says FY guidance is unchanged, but the language sounds more cautious. Says the quarterly cashflow is very strong and consequently net debt is better than expected, also aided by lower capex. "Overall good results, but stock has performed very well into numbers already," says Singh. Has a buy rating and 160p price target. Shares closed at 140p. ([email protected]) 0649 GMT [Dow Jones] Kazakhmys (KAZ.LN) 1H copper cathode output was ahead of management's expectations, says Nick Mellor of Ambrian Partners. He says grades continue to drop. It [offset] that by upping throughput. There are no bottlenecks in terms of its processing. Ambrian has a buy rating and a 1280p target. Kazakhmys closed Wednesday at 1197p. ([email protected]) 0647 GMT [Dow Jones] Travis Perkins (TPK.LN) reports very strong 1H numbers and overall performance, says Liberum Capital analyst but adds that outlook might "unnerve" the market. Says that Travis Perkins results are ahead of expectations and "ought to be taken in quite well" as the figures present a scope for upgrades. But adds that outlook, although it is ahead of expectations, might unnerve the market in current nervous times. Says that Travis buying BSS is also a very good deal. Has buy rating and target price of 1100p. Shares closed at 830p. ([email protected]) 0647 GMT [Dow Jones] Royal Dutch Shell (RDSB.LN) modestly beating analysts' consensus with its 2Q results gives cause for optimism over its performance in the next few years, says ING analyst Jason Kenney. The good performance has mainly come from very good downstream operations, but despite output growth of 5%, upstream performance is less impressive and Shell's production costs appear to still be high, he says. Gives hold rating, 2063p target. Shares closed down 2.2% Wednesday at 1707p. ([email protected]) 0637 GMT [Dow Jones] AstraZeneca's (AZN.LN) backing by US FDA panel for the use of Brilinta, a proposed anti-clotting drug, was consistent with expectations, says UBS, though contrasted with "market concerns of a split panel, a narrow label, and/or requirements for more trials before US approval." AstraZeneca is seeking FDA approval of the drug to prevent heart attacks and other cardiovascular problems in patients diagnosed with acute coronary syndrome. "We now raise our probability of Brilinta approval in the US to 90% and will update our $3B 2014 Brilinta forecasts (versus consensus at $1.7B) with our 2Q10 AstraZeneca model update," adds UBS. Has a buy rating and 4100p target price on the stock. Shares closed at 3202p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 29, 2010 03:17 ET (07:17 GMT)