UK MARKET TALK ROUNDUP: BROKERS COMMENTS

28th Jul 2010 07:38

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] 0638 GMT [Dow Jones] Compass Group's (CPG.LN) 3Q trading shows further strong improvement in the organic growth, says a trader. Says 3Q saw 5.5% organic growth compared to 2Q which saw 2.5% and 1Q which saw 1.7%. Says 3Q organic growth was driven by an increase in new business wins and a slight improvement in retention rates. Also, the company shows particularly strong performances in North America and rest of world. "3Q margins have improved by circa 35 basis points and free cash flow conversion remains strong," adds trader. Shares closed at 558p. ([email protected]) 0636 GMT [Dow Jones] British American Tobacco's (BATS.LN) 1H numbers look good, says a trader. Notes volumes are flat, having been down 1% in 1Q. Says EPS of 87.1p is bang in line with his expectations. Says the results imply "FY numbers look very safe at worst." Shares closed Tuesday at 2259p. ([email protected]) 0630 GMT [Dow Jones] BG Group's (BG.LN) 2Q results are positive overall, but the companies upstream division fell short of expectations, says ING analyst Jason Kenney. The performance at the liquefied natural gas division was very good and it's likely that formal guidance will be raised, Kenney says. Reserves and resources continue to grow, he adds. Gives buy rating, 1300p target. Shares closed down 0.3% Tuesday at 1063p. ([email protected]) 0629 GMT [Dow Jones] Goldman Sachs raises BP (BP.LN) target price to 570p from 540p following 2Q earnings. The company has widened its planned disposals to $25B-$30B worth of assets over the next 18 months from previous plans to dispose of $10B worth over the next 12 months. Goldman says this is encouraging news. "In our view, it will help to release some of the company's SOTP value and allow BP to re-start the dividend payment [although most likely at a reduced rate] with the 4Q results," says Goldman. It adds that investigations about the causes of the spill remain "the key catalyst to determine the total liability for the company." Neutral rating. Shares closed Tuesday at 406p. ([email protected]) 0627 GMT [Dow Jones] Morgan Stanley raises Daily Mail & General Trust (DMGT.LN) price target to 630p from 600p following the company's 3Q update. Cites a greater confidence in trading, adding that the update showed a strong acceleration across the portfolio. Notes underlying revenues are up 6%, having been down 3% in 1H'10, driven by 9% uplift at B2B divisions. Brokerage raises '10 pretax profit estimate by 3.3% to GBP243M and '10 EPS estimate by 2.3% to 46.1p. Adds the stock's valuation is conservative, as it does not reflect the major changes undertaken by management in the last 18 months. Keeps the stock at overweight. Shares closed Tuesday at 487p. ([email protected]) 0614 GMT [Dow Jones] Morgan Stanley raises Croda International (CRDA.LN) price target to 1450p from 1140p. Following the company's 2Q results, the real underlying earnings power of the group's restructured portfolio became apparent. "We believe organic growth, potential cash return to shareholders and improving mix will become the key EPS drivers." This is in stark contrast to the restructuring-driven earnings growth of recent years, MS says. Keeps the stock at overweight. Shares closed Tuesday at 1272p. ([email protected]) 0613 GMT [Dow Jones] JPMorgan Cazenove upgrades Anite (AIE.LN) to overweight from neutral following the company's FY results. "With the full availability of Anite's LTE handset testing box and the indication of a good near-term pipeline...we believe the company has turned a significant corner." There are higher revenue expectations, but also higher costs, including lower net revenue margins related to a higher proportion of hardware sales in development testing sales. Brokerage also introduces a 50p price target on the stock. Shares closed Tuesday at 41p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 28, 2010 02:38 ET (06:38 GMT)