UK MARKET TALK ROUNDUP: BROKERS COMMENTS

28th Jun 2010 07:53

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] 0653 GMT [Dow Jones] Investec lifts its price target on Weir Group (WEIR.LN) to 1580p from 1200p, and maintains its buy stance. Cites a further set of material upgrades, an increasingly positive outlook and a greater appreciation of the group's growth prospects following the capital markets day. Says Weir is likely to experience a material re-rating over the next 18 months with the market yet to recognise its status as one of the fastest growing and highest quality stocks in the UK Industrials space. Shares closed at 1081p. ([email protected]) 0652 GMT [Dow Jones] Investec downgrades HMV (HMV.LN) to hold from buy, and cuts its target price to 60p from 110p. Says its initial positive reaction to HMV's strategy update had been predicated on a stable trading position at the core UK HMV division, which it has subsequently transpired was not the case. Raises FY '10 pretax profit forecast to GBP75M, from GBP74M, but cuts FY '11 forecast to GBP72.5M, from GBP80M, and FY '12 forecast to GBP73.5M, from GBP84M. "In the absence of short-term catalysts ahead of peak trading, we believe it is appropriate to adopt a more cautious stance," says Investec. Shares closed at 54p. ([email protected]) 0650 GMT [Dow Jones] Taylor Wimpey's (TW.LN) trading update shows UK sales rates dipped heading into the UK general election but have strengthened in recent weeks, says Liberum Capital. Adds that pricing in US markets has remained stable, while the sales rate accelerates in Canada. Says the company also witnessed flat units sales in 1H in UK and North America, with prices up 9% in UK and flat in US. Reckons the stock looks cheap on 65% net-asset-value but still has a high level of debt at GBP650M, while noting that cash-flows are still slow. Has a hold rating. Shares closed at 30p. ([email protected]) 0628 GMT [Dow Jones] Qinetiq Group's (QQ.LN) announcement that a UK workforce ballot has resulted in an overall vote in favor of proposed changes to the terms of their employment will be a boost to the share price, says an analyst. Says Qinetiq needed a majority vote for the changes, as this is essential for the group's 24-month restructuring plan. However, suggests that upside may be limited as structural uncertainties remain. Overall, says restructuring will be expensive and could be difficult. Awaits further definition of the strategy from the company. Shares closed on Friday at 117p. ([email protected]) 0628 GMT [Dow Jones] Standard Chartered PLC (STAN.LN) first-half of 2010 trading update "overall positive," mostly driven by good consumer banking income growth and wholesale client activities, says Oriel Securities analyst Mike Trippitt. "There are negatives, however, including that weaker market sentiment in recent weeks has hurt momentum in the wholesale division." Adds stock gains in recent weeks could drive shares lower Monday. Has "add" rating, 1800p target price. Shares closed Friday at 1742p. ([email protected]) 0616 GMT [Dow Jones] Goldman Sachs downgrades ReneSola (SOLA.LN) and PV Crystalox Solar (PVCS.LN) to sell from neutral, given their relative potential downside versus the rest of the brokerage's coverage. Adds that European manufacturers of wafers, cells and modules remain hindered by structurally higher cost bases and that additional advanced solar photonics reductions are likely to lead to further erosion of margin, profitability and returns. After changing its valuation methodology, Goldman raises ReneSola price target to 200p from 169p. Meanwhile, cuts PV Crystalox price target to 52p from 60p implying 8% downside from current levels. ([email protected]) 0616 GMT [Dow Jones] Citigroup lowers Kazakhmys (KAZ.LN) target price to 1300p from 1610p. Says Kazakhmys offers an inexpensive vehicle to invest in copper, and the rapid electricity tariff inflation in Kazakhstan. However, Citigroup estimates, given the company's longer-dated growth versus the peer group, the shares are currently discounting $2.75 per pound copper versus spot at $2.95 per pound - "a valuation gap that needs to be greater in order for us to become more positive on the shares." Has a hold rating. Shares closed at 1067p. ([email protected]) 0608 GMT [Dow Jones] Citigroup initiates Meggitt (MGGT.LN) with a buy rating and 400p target price. Says the management is well regarded and Meggitt shares have been long-term outperformers. Brokerage is positive on civil aerospace, where it believes recovering airline traffic should drive an early-cycle recovery in Meggitt's aftermarket business. Adds the original equipment outlook has also improved, with a late-cycle decline in large jet deliveries now looking increasingly unlikely. Also says significant further falls in regional or business jet production also look unlikely. Adds Meggitt has an attractive combination of modest operating and financial leverage. Shares closed at 310p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 28, 2010 02:53 ET (06:53 GMT)