UK MARKET TALK ROUNDUP: BROKERS COMMENTS

25th Jun 2010 07:30

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] 0630 GMT [Dow Jones] The positive response by the pension regulator to British Airways (BAY.LN) earlier this week "could bode well for the ongoing review of BT's (BT.A.LN) agreement", Royal Bank of Scotland says. "There seem to be few certainties in actuarial science and we know BT's pension funding remains a material uncertainty for investors. But we believe the next six months could see a steady stream of news that supports our view that BT's agreement with the trustees is prudent and that the valuation of GBP7.5b we have in our SotP (sum of the parts) is reasonable," RBS says. Broker sees about 25% upside from the current price and believe the market is over-discounting BT's pension funding position. RBS has a buy rating on BT and 170p target price. ([email protected]) 0626 GMT [Dow Jones] UBS raises DS Smith (SMDS.LN) price target to 155p from 145p following the company's robust 2H update. Notes free cash flow was strong, while the company's outlook was encouraging. Sees potential for acquisitions/organic growth as well as divestments as the group has a strong balance sheet. Raises FY'11 EPS estimate to 15.58p from 13.73p and FY'12 EPS estimate to 18.33p from 15.88p. Keeps the stock at buy. Shares closed Thursday at 122p. ([email protected]) 0623 GMT [Dow Jones] Citigroup reduces Kazakhmys (KAZ.LN) price target to 1300p from 1610p. Says in the near term, the shares lack any major catalysts beyond a reversion in the copper price. Estimates that given its longer-dated growth versus the peer group, the shares are currently discounting $2.75/lb copper versus the spot price of $2.95/lb. Says the valuation gap needs to be greater for the brokerage to become more positive on the shares. However, thinks Kazakhmys offers an inexpensive vehicle to invest in copper and electricity tariff inflation in Kazakhstan. Maintains hold. Shares closed Thursday at 1110p. ([email protected]) 0612 GMT [Dow Jones] Morgan Stanley downgrades ITV (ITV.LN) to equalweight from overweight and cuts the price target to 66p from 70p. The brokerage is setting "realistic advertising expectations" for a tougher UK economic background. Meanwhile, it notes that the UK Culture Secretary has said the contract rights renewal "is an example of micro-regulation we can do without." Abolition of CRR could enhance ITV EPS in the first full year by 13-15% says the bank. Shares closed Thursday at 55.3p.([email protected]) 0611 GMT [Dow Jones] Morgan Stanley downgrades G4S (GFS.LN) to underweight from equalweight but raises target price to 270p from 255p. Thinks '10-'13 earnings are unlikely to grow at the previous med-teens rate and reckons the valuation is not compelling. Sees 4% downside to its new target price. Thinks the stock is well-liked but says there are better opportunities elsewhere. Shares closed Thursday at 282p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 25, 2010 02:30 ET (06:30 GMT)