UK MARKET TALK ROUNDUP: BROKERS COMMENTS

20th Jul 2010 08:12

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] 0712 GMT [Dow Jones] Despite the disappointing results from Texas Instruments (TXN) late Monday, there is no material impact to the UK semis, says Execution Noble. Says it was largely a well-documented "customer specific issue" with Nokia (NOK) that impacted Texas' results. Notes CSR (CSR.LN) is regaining its market share at Nokia, but also its latest Bluetooth chip is primarily targeted at the low/mid-tier feature phone market and shipping to multiple handset vendors. Has CSR at buy, and is Execution Noble's top-pick in the space. On the other hand, says the sharp year-to-date rise in other UK semi stocks, along with hefty valuations, leave no room for disappointment as the 2Q '10 reporting season gets underway. ([email protected]) 0709 GMT [Dow Jones] William Hill's (WMH.LN) first-half trading update is "positive," with online operations showing a "strong" performance, Liberum Capital analyst Nigel Hicks says. Adds the stock is undervalued, along with its peers. "We view both William Hill and Ladbrokes (LAD.LN) as extremely cheap stocks," he says. "We think that the market is too low on forecasts, although the start of the Premiership during August and into September is key to the third quarter rebounding against a very weak comparative," Hicks adds. Has a buy rating. Shares -0.2% at 179p. ([email protected]) 0655 GMT [Dow Jones] William Hill (WMH.LN) offers a 2Q trading update Tuesday, with trading slightly Shore Capital's expectations given the anticipated World Cup benefit and move to Gibraltar. Following this update, Shore considers cutting its 2010 EPS estimate to 19p [in line with consensus] from 20p, reflecting a weaker retail market. Still, it keeps a buy rating, as the company remains attractive given the group's cash generation, with continued debt reduction alone expected to drive earnings. Shares closed Monday at 178p. ([email protected]) 0655 GMT [Dow Jones] William Hill (WMH.LN) can be expected to see "pressures on trading in the next twelve months," Numis Securities analyst Wyn Ellis says. "William Hill has a combination of operational excellence and operating and financial leverage, which will make the shares an attractive investment when confidence among its consumers returns. But that return of confidence seems some way off and, without it, maintaining profits in the betting shops will be hard work," Ellis says. Says the group's outlook is in line with the broker's forecasts. Has a hold rating and 188p target. Shares closed Monday at 179p. ([email protected]) 0652 GMT [Dow Jones] IG Group (IGG.LN) reports strong fiscal 2010 growth, says UBS, though most of the figures were announced in June so it was already well-flagged. A final dividend of 13.5p beat the bank's expectations, though, and it expects the strong growth to continue in the medium term, particularly in Europe. UBS has a buy rating and 500p price target. Shares closed Monday at 467p. ([email protected]) 0649 GMT [Dow Jones] Cable & Wireless Worldwide's (CW.LN) FY Ebitda is looking to be at the lower end of expectations, says an analyst, commenting on the company's interim management statement. Is most concerned with regards to UK austerity measures. Says non-contracted spending in the UK public sector has slowed significantly, which could adversely impact trading in the current year due to the company's public sector business. Sees read across to other peers. Shares closed on Monday at 84p. ([email protected]) 0636 GMT [Dow Jones] IG Group's (IGG.LN) preliminary results for the year ended May 31 '10 are in line with the interim management statement back in June, says a trader. Says this suggests that client activity is still strong. Says the company seems to have addressed its bad debt issues, which affected its '08 numbers. Lower volatility during the financial year also helps here. Notes that the stock has had a good run of late. Suspects that it could start positively but then pull back. Shares closed on Monday at 467p. ([email protected]) 0619 GMT [Dow Jones] HSBC raises International Power (IPR.LN) target price to 370p from 340p, after France's GDF Suez (GSZ.FR) renews talks with the company about a tie-up. HSBC says a tie-up with GDF-Suez would be compelling financial and operational logic for International Power. "Listing of an international energy combination would liberate a growth business," adds HSBC. Retains an overweight rating. International Power shares closed Monday at 350p. ([email protected]) 0611 GMT [Dow Jones] ING downgrades Vodafone Group (VOD.LN) to hold from buy and cuts target price to 155p from 165p. "We do not expect the upcoming trading statement [due July 23] to be weak but have concerns about operational performance in Italy and Spain," says ING. It reckons that at current levels, Vodafone needs to deliver on its plans for value realization through some portfolio changes, but ING does not believe anything is imminent. "We are concerned about negative newsflow around developments in India, taxation, and spectrum. Lastly, we note that earnings momentum will not be helped by the weakness of the euro," adds ING. Shares closed Monday at 145p. ([email protected]) 0610 GMT [Dow Jones] Jefferies initiates coverage of London-listed specialist insurers with a positive view. Starts Amlin (AML.LN) and Lancashire Holdings (LRE.LN) at buy with 478p and 638p targets respectively; Catlin (CGL.LN) and Hiscox (HSX.LN) at hold with 406p and 371p targets respectively; and, lastly, Brit Insurance at underperform with a target of 804p. Does not agree with the general view that these stocks are volatile and potentially under-capitalized. Thinks the sector offers the potential for yields to reach double-digit levels. Has a preference for well-run, attractively valued stocks that can deliver through the soft cycle. These include Amlin and Lancashire. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 20, 2010 03:12 ET (07:12 GMT)