UK MARKET TALK ROUNDUP: BROKERS COMMENTS

8th Jul 2010 12:11

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] 1111 GMT [Dow Jones] Royal Bank of Scotland raises Robert Walters (RWA.LN) price target to 255p from 240p following the company's results. Notes net fee growth exceeded the brokerage's expectations and as a result, raises '10 and '11 EPS forecasts 50% and 30%, respectively. Says once again, the Asia Pacific region was the group's main growth engine. Still, RBS keeps the stock at hold, saying there is insufficient upside to its price target to justify a buy rating. Shares +0.3% at 238p. ([email protected]) 1000 GMT [Dow Jones] Credit Suisse cuts CRH (CRH.DB) price target to EUR21 from EUR23 following the company's results. Says CRH now expects 1H Ebitda to be down 20% year-on-year, a small negative revision from the company's prior guidance. Brokerage cuts '10 and '11 EPS estimates by 10%. Notes the group flagged more general risks to its trading outlook, commenting on 'intensified' concerns over European fiscal deficits, and 'some softening' in the US recovery. Still, says trading has exhibited a decent recovery pattern. Keeps at outperform. Shares -1.9% at EUR15.77. ([email protected]) 0924 GMT [Dow Jones] Panmure Gordon upgrades Connaught (CNT.LN) to hold from sell and raises its price target to 130p from 110p following the company's interim statement. Panmure says there appears to be no new negatives within Social Housing and the Compliance and Environmental revenues are said to be robust. Panmure also notes the resignation of the chief executive and finance director. It remains cautious on the stock, but thinks the shares will rally in the short-term on this news. Shares -6.4% at 111p. ([email protected]) 0909 GMT [Dow Jones] Credit Suisse cuts Man Group (EMG.LN) price target to 260p from 280p, to reflect the shares going ex 2H dividend of 17p. CS says assets-under-management at the end of June are in line with its forecast, while net outflows of $1B for the period are slightly worse than Credit Suisse's forecast of $700M and broadly in line with the run-rate in previous quarters. CS says valuation is cheap but not yet compelling. Neutral rating. Shares +1.1% at 219.5p. ([email protected]) 0848 GMT [Dow Jones] Singer Capital Markets initiates coverage of Summit Corp. (SUMM.LN) with an 11p price target. The broker says the drug development and research services firm has a promising therapy for Duchenne muscular dystrophy in early-stage clinical trials with BioMarin (BMRN), as well as a raft of experimental medicines called seglins that should attract pharmaceutical industry interest. Analysts Shawn Manning and Elizabeth Klein say an increase in the company's share price will be driven by partnering deals for its three leading seglin compounds, which they expect between 2011 and 2013. Shares flat at 4.5p ([email protected]). 0826 GMT [Dow Jones] Citigroup cuts CRH (CRH.DB) target price to EUR22 from EUR24 following the company's interim results. Notes overall the outlook comments pointed to a softening in the pace of recovery rather than a painful double-dip. Cuts '10 EPS estimate to 92 cents from 94 cents and '11 EPS estimate to 122 cents from 142 cents. Still, "we continue to have a buy on CRH based on our preference for US exposure, assumption that a double-dip recession is avoided and a belief that acquisitions will feature more significantly over the next 12-18 months." Shares -0.4% at EUR16.01. ([email protected]) 0708 GMT [Dow Jones] Babcock (BAB.LN) issues a trading update for its first quarter, and business performance appears in line with expectation, says Shore Capital. Adds cash generation continues, the order book remains at GBP8.3B, and the bid pipeline remains 'healthy' according to the management. Says Babcock continues to pay down debt to facilitate the acquisition of VT Group (VTG.LN). Expects some short term challenges from contract and program changes, but sees the combined group becoming a more effective competitor in the market through greater economies of scale. Keeps a buy rating. Shares +0.3% at 621p. ([email protected]) 0658 GMT [Dow Jones] HSBC initiates coverage of European business services stocks. Says there has been some considerable volatility in the sector as investors wrestle with recession, the speed of the recovery and the possibility of a relapse in demand. "Through the clamour of much macroeconomic noise, the market has perhaps started to anticipate a mechanical slowing of growth after the early thrills of recovery." Starts Northgate (NTG.LN), Regus (RGU.LN) and Aggreko (AGK.LN) at overweight, with 260p, 110p and 1600p price targets, respectively. Also starts Experian (EXPN.LN), Mears (MER.LN) at overweight with 750p and 310p price targets. Starts Xchanging (XCH.LN), Capita Group (CPI.LN) and Davis Service Group (DVSG.LN) at neutral, with 210p, 800p and 390p price targets, respectively. Also starts Group 4 Securicor (GFS.LN) and Mitie Group (MTO.LN) at neutral, with 295p and 220p price targets. Initiates coverage of Ashtead Group (AHT.LN) at underweight with 75p price target. ([email protected]) 0653 GMT [Dow Jones] Babcock's (BAB.LN) update confirms trading in line with expectations, says KBC Peel Hunt, with the order book stable at GBP8.3B. Says the outlook remains positive, with good cash generation. Notes the focus remains on the VT Group (VTG.LN) acquisition which is due to complete Thursday. Says the stock's valuation is attractive for a high quality outsourcing play, capable of double digit organic growth with long-term income streams. Has the stock at buy with 650p price target. Shares closed Wednesday at 619p. ([email protected]) 0650 GMT [Dow Jones] AB Foods' (ABF.LN) update is good, says Martin Deboo of Investec, though he doesn't expect it to result in FY upgrades. Says positive news on Primark is somewhat offset by the negative comments on Portuguese sugar. Adds Primark same-store sales look to have slowed since the 1H. Even so, "the big picture is that AB Foods is performing well across its divisions." Rates at buy, with 1080p price target. Shares closed Wednesday at 980p. ([email protected]) 0647 GMT [Dow Jones] KBC Peel Hunt upgrades Hays (HAS.LN) to hold from sell following the company's in-line 4Q update. Brokerage says the anticipated fall off in the UK public sector work is in KBC's numbers and also in the share price, with the shares off 20% in the last three months. "In the short to medium term we see no catalysts for the stock but we believe the 6.5% yield will underpin the shares." Has a 90p target. Shares closed at 91p Wednesday. ([email protected]) 0636 GMT [Dow Jones] Man Group's (EMG.LN) first-quarter trading update is "in line with expectations," with some positive signs that include lowest level of redemptions in three years from institutional investors, says Oriel Securities analyst Keith Baird. Adds the positive performance of AHL fund against backdrop of falling markets is also a good sign, although the result is still modest. Keeps at hold, with 300p target price. Shares closed Wednesday at 217p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 08, 2010 07:11 ET (11:11 GMT)