UK MARKET TALK ROUNDUP: BROKERS COMMENTS

1st Jul 2010 08:10

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] 0710 GMT [Dow Jones] John Wood Group's (WG.LN) trading statement shows that overall performance for the year-to-date is in line with expectations, says Arden. Says engineering remains a mixed bag, as expected, with positive sub-sea activity levels and a growing prospect list on the upstream side but ongoing pressure in the downstream and industrial areas. Says production facility levels are robust. Thinks Wood Group is an attractive investment, with its low-risk operating model, which looks quite lean following a period of cost rationalization. Says, "Wood Group offers a low-risk geared play into rising capital investment levels and a firming North American market." Keeps at buy. Shares -1.1% at 310p. ([email protected]) 0656 GMT [Dow Jones] Wellstream's (WSM.LN) trading update looks in line with consensus says Arden. Says the order book has improved from the May interim management statement. However, sees a note of caution about 2H '10, given the lack of visibility in the international markets and uncertainty surrounding the impact of the Gulf of Mexico situation. Continues to see better value elsewhere in the sector. Maintains neutral recommendation. Shares closed Wednesday at 503p. ([email protected]) 0653 GMT [Dow Jones] BT Group's (BT.A.LN) prices for Sky Sports 1 and 2 channels look "pretty compelling", Liberum Capital analyst Mark James says. BT Vision customers will be able to receive Sky Sports 1 and Sky Sports 2 channels, which are owned by British Sky Broadcasting Group (BSY.LN) and show the majority of the Premier League football matches, for GBP16.99 a month. Or if customers chose a bundle of broadband and calls, they will get sport for GBP11.99 a month. "I think it will be well received," says James, who has a buy rating on BT and 160p target price. Shares closed at 130p Wednesday. News Corp (NWS), which owns Dow Jones & Co, publisher of this newswire and The Wall Street Journal, holds about a 39% stake in BSkyB. ([email protected]) 0653 GMT [Dow Jones] BT's (BT.A.LN) announcement of its pricing for British Sky Broadcasting's (BSY.LN) Sky Sports 1 and 2 looks at first glance like a loss leader, says a trader. Says customers subscribing to the channels along with a 12-month broadband contract and BT Vision contract will pay GBP11.99 per calendar month, while BT pays BSkyB GBP17.14 per month and also subsidises the Vision boxes. But, notes that the company says this pricing is within the guidance set at its strategy day. Overall, thinks the announcement will be taken well. BT Group closed Wednesday at 130.1p. News Corp. (NWS), which owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal, holds about a 39% stake in BSkyB. ([email protected]) 0650 GMT [Dow Jones] Tate & Lyle's (TATE.LN) disposal of its sugar refining operations in the European Union to American Sugar Refining Inc for GBP211M in cash is a "sweet deal", says an analyst. Says this deal will help to reduce the company's debt, which stood at GBP814M at March 31. Analyst adds the company is looking to exit from the sugar market altogether, noting it is taking steps to sell its molasses and Vietnamese sugar businesses, its remaining sugars operations. The exit suggests the company is focusing on its specialty food ingredients business. Shares closed at 450p. ([email protected]) 0642 GMT [Dow Jones] Greene King's (GNK.LN) preliminary FY results are promising, with pretax profit in line with consensus expectations, says a trader. Says the company has had an encouraging start to the year, despite the cautious UK consumer. Says the pub group is well positioned to emerge from a weaker recessionary background and take advantage of future growth opportunities. Says it is looking strong versus peers. Expects the stock to start up by 5p. Shares closed Wednesday at 392p. ([email protected]) 0638 GMT [Dow Jones] Debenhams' (DEB.LN) interim results are slightly disappointing, says a trader. Says the statement is cautious, and notes the company remains wary over the strength of the retail market and consumer confidence levels. However, thinks the chief executive's comments with regards to the refinancing will be well received. Says the refinancing is progressing well, and Debenham's expects this to be completed within the next few weeks, well ahead of schedule. Trader expects the stock to open up by 1p. Shares closed on Wednesday at 53p. ([email protected]) 0637 GMT [Dow Jones] Credit Suisse cuts Eurasian Natural Resources (ENRC.LN) target to 1250p from 1400p. Brokerage remains concerned over near-term momentum and reduces 2010 and 2011 earnings forecast by 18% and 8% respectively. Says this is to reflect lower ferrochrome prices in 2H '10 and greater customer discounting than previously expected. Has a neutral rating. Brokerage continues to like the longer term investment case of the stock. "A strong balance sheet and expandable assets provide the growth potential that could reach 10% per annum," it adds. Shares closed at 861p Wednesday. ([email protected]) 0627 GMT [Dow Jones] Credit Suisse initiates Vedanta Resources (VED.LN) with an outperform rating, and 3400p target price. Says with slowing commodity price momentum, now is the time to look for stocks with internal catalysts to drive performance. "Vedanta is a high-growth stock and, although a number of uncertainties exist, we believe little of the potential medium-term upside is priced in," it says. Adds following a period of underperformance, the stock currently presents an attractive entry point. Says the stock is its top pick among UK mid-caps. "Vedanta has one of the best growth profiles among the UK miners over the next three years," adds Credit Suisse. Shares closed at 2125p.([email protected]) 0621 GMT [Dow Jones] Citigroup lowers HMV Group (HMV.LN) target to 80p from 110p "to reflect the weak outlook given in preliminary results and industry de-rating." Says 4Q revenue trends in HMV suffered from a number of headwinds, most notably a tough +18.4% two-year 4Q like-for-like comparative, which falls to +2% over the peak trading period in the new financial year. However, "we think this and the combination of further modest HMV market share gain progress, the ongoing HMV product mix shift, and margin recovery at Waterstone's should allow HMV to retain a stable group EBIT platform," it adds. Has a buy rating. Shares closed at 63p Wednesday. ([email protected]) 0613 GMT [Dow Jones] UBS initiates Petropavlovsk (POG.LN) at buy with 1600p target, implying about 35% upside to the current share price. Expects the company to maintain its low-cost position relative to the sector and also to more than double output by 2014. Estimates that the company's current mines and upcoming projects have an average life span of 10-15 years but thinks additional long-term production potential is possible. Shares closed Wednesday at 1190p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 01, 2010 03:10 ET (07:10 GMT)