UK MARKET TALK ROUNDUP: BROKERS COMMENTS

29th Jun 2010 08:00

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] 0700 GMT [Dow Jones] Serco Group's (SRP.LN) trading update confirms guidance for margins and revenues for the full year to December, says Shore Capital. However, says the details of the new corporate reporting structure, reflects the strong operational progress made in the past couple of years. Adds that management comments on the high revenue visibility present from the order book and the impact of large contracts commencing last year. "With increasing international exposure, we believe the outlook for continued and unbroken strong growth for Serco remains positive," says Shore. Has a buy rating. Shares closed at 624p. ([email protected]) 0657 GMT [Dow Jones] National Express (NEX.LN) is making "stable progress" says Gert Zonneveld, co-head of research at Panmure Gordon. Says the company has gone through a difficult time, with North American and bus units "below par" but adds they are taking actions to improve margins. "The company seems to be on the right track but clearly a lot of work remains to be done," he says. Adds it's too early to see an improvement in the bottom line. Has 255p target price and hold recommendation. Shares closed Monday at 227p. ([email protected]) 0648 GMT [Dow Jones] UBS raises Kazakhmys (KAZ.LN) to buy from neutral. Says that after rising considerably earlier in the year and peaking at 1634p in April, the Kazakhmys share price has fallen back sharply and is now about 35% off its earlier peak, compared to about 25% for other mid-cap miners. Adds that year-to-date the Kazakhmys share price is down 23%. Maintains 1390p target price. Shares closed at 1087p. ([email protected]) 0647 GMT [Dow Jones] National Express' (NEX.LN) preclose statement indicates its second quarter is trading in line with expectations, says a trader. Notes the progress that has been made on cost reductions and the company's strong operational focus. Does not see anything in the statement to surprise the market, Tuesday. Shares closed on Monday at 227p. ([email protected]) 0644 GMT [Dow Jones] Credit Suisse lowers Vodafone Group (VOD.LN) to neutral from outperform following outperformance and minimal upside vs consensus forecasts. Brokerage sees modest upside to consensus EPS and free-cash-flow forecasts, but all driven by Verizon (VZW) EBIT, with a recovery in Vodafone Europe now reflected in consensus forecasts. "We see relatively low earnings risk and growing cash return," it adds. For 1Q '10, Credit Suisse expects a modest economic drag in Southern Europe whilst Vodafone UK and Germany rebound. Has a 160p target price. Shares closed at 146p Monday. ([email protected]) 0638 GMT [Dow Jones] UBS raises Premier Oil (PMO.LN) target price to 1500p from 1470p. Says the company took analysts on a very successful trip to Asia visiting construction on Chim Sao in Vietnam, due to start up June 2011 and Gajah Baru, Indonesia, due to start up October 2011. Says that both projects are important to the company achieving its 2012 production target of 75 thousand barrels per day, together contributing around a third of this target on brokerage's numbers. "We believe that construction is on target or ahead of schedule," adds UBS. Has a buy rating. Shares closed at 1266p. ([email protected]) 0634 GMT [Dow Jones] Serco Group's (SRP.LN) pre-close trading update is positive, according to an analyst, confirming a good first-half and that the company is on track to deliver guidance for this year. The outlook statement looks confident too, and the analyst also notes the substantial order book, new contract wins along side the scale and scope of existing contracts. Thinks outsourcing opportunities in the public sector as a result of the UK government's deficit reduction strategy will also be a positive. Shares closed Monday at 624p.([email protected]) 0633 GMT [Dow Jones] UBS upgrades Logica (LOG.LN) to buy from neutral on valuation grounds. Notes the stock has underperformed peers as concerns regarding its public sector exposure have plagued the stock since the UK general election. Thinks Logica has a fairly "typical" group exposure to the public sector, of 33%. Also thinks its UK government exposure is in line with peers, at 62% of UK sales and 13% of group sales. Adds risks undoubtedly exist, but these are more likely to hit in '11. Maintains 133p price target. Shares closed on Monday at 109p. ([email protected]) 0601 GMT [Dow Jones] ING upgrades Reckitt Benckiser (RB.LN) to buy from hold, and raises its price target to 3700p from 3400p. Thinks the recent contraction in the price to earnings ratio offers an excellent long-term entry point. Thinks at a '11 PER of 15x, Reckitt is more than discounting potential negative news flow and is attractively priced. This negative news flow includes raw material pressure, competitive pressures in Europe and risks related to Suboxone. Shares closed on Monday at 3122p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 29, 2010 03:00 ET (07:00 GMT)