UK MARKET TALK ROUNDUP: BROKERS COMMENTS

29th Jul 2010 12:39

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] 1139 GMT [Dow Jones] Royal Bank of Scotland cuts Rathbone Brothers (RAT.LN) price target to 954p from 995p. Regards the stock's current valuation as fair but sees more value elsewhere in the asset management/discretionary investment sector. Specifically, likes Henderson Group (HGI.LN) and Aberdeen Asset Management (ADN.LN), both rated at buy. Meanwhile, says 1H '10 underlying pretax profit and the interim dividend are in line with RBS's expectations. But reported pretax profit is slightly below forecast, due to higher than expected amortization charges. Keeps at hold. Shares are +0.2% at 827p. ([email protected]) 1005 GMT [Dow Jones] Merchant Securities initiates coverage of Avia Health Informatics (AVIA.LN) with a buy recommendation and 80p price target. Analyst Ian Jermin says the company, which makes software designed to help diagnose illness, is poised to grow sales overseas now its Odyssey product suite has been made available online and translated into several languages. The product, which is designed to be cost-effective and save users time, should appeal to healthcare providers looking to save costs, Jermin adds. Shares flat at 48.5p ([email protected]) 0807 GMT [Dow Jones] Rolls Royce's (RR.LN) 1H results are solid, says Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, against a difficult backdrop. The strategy aimed at reducing the volatility of earnings is again evident, with after-sales service revenues now nearing a third of group total. However, Bowman notes management has underlined near-term economic uncertainty, whilst comparatives over the second half are expected to become more challenging. Potential cuts in defence are also a concern. Shares +2.2% at 600.5p. ([email protected]) 0806 GMT [Dow Jones] AstraZeneca (AZN.LN) shares +4.1% at 3334p, with core 2Q results strong and guidance increased, notes Evolution Securities. Separately, the FDA panel backed broad Brilinta approval, Evolution adds, a positive for the stock. However, Evolution keeps at sell, with a 2850p target. It says AstraZeneca is the only stock in its coverage universe where it expects significant sales declines by 2020. "With the positive Brilinta and Crestor news flow behind us we see little to support the stock and recommend taking profits," adds Evolution. ([email protected]) 0805 GMT [Dow Jones] BAE Systems (BA.LN) +1.4% at 321p after reporting net profit soared in 1H. These interim results are good, says Investec and should reassure the market. However, Investec doesn't expect to change its top-end-o-the-range forecasts materially. "BAE appears cheap, but for us lacks the catalysts for a proper re-rating," says Investec. Has a hold rating and a 350p target price. Shares +1.4% at 322p. ([email protected]) 0729 GMT [Dow Jones] National Express (NEX.LN) half year results were better than Arbuthnot Securities' estimates. North America, Spain and U.K. rail outperformed relative to broker estimates. Says "The general trend appears to be one of better margins than we had expected, with revenue broadly in line. We view this as encouraging given that cost control is more likely to be the result of management action, and that the risks to top line growth ought to be on the upside, assuming the economic outlook does not deteriorate" Has neutral recommendation with 220p target price. Shares -1.8% at 238p. ([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]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 29, 2010 07:39 ET (11:39 GMT)