UK MARKET TALK ROUNDUP: BROKERS COMMENTS

17th Jun 2010 11:24

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] 1024 GMT [Dow Jones] Ashtead's (AHT.LN) FY results show early signs of improvement, particularly in the US, suggesting that the bottom of the cycle has been passed, says Investec Securities. It notes the results beat expectations, with Ashtead gaining market share in both the UK and US, which increases its gearing into the market recovery. Buy recommendation, 140p target. Shares +1.7% at 116p. ([email protected]) 1021 GMT [Dow Jones] WS Atkins's (ATK.LN) FY results are strong, says Investec Securities. The group has proven to be very nimble with its cost base, with a 10% reduction in headcount in FY'10, says Investec. It reiterates a hold rating despite the good results, "as the stock is trading at the upper end of the sub-sector and as potential UK government spending cutbacks create some uncertainty." 675p price target under review. Shares -3.7% at 699p.([email protected]) 1000 GMT [Dow Jones] Seymour Pierce initiates coverage of Aggreko (AGK.LN) at outperform with 1555p price target following a visit to Africa. Says the company has significant long-term opportunities and expects the group to continue to generate strong revenue growth in the foreseeable future. It notes Aggreko has an edge over its peers through its scale and geographic reach. "Aggreko's rating is at a premium to a support services peer group. We believe this is justified by the strong growth prospects, solid market position and high margins generated by the company." Shares -0.1% at 1469p. ([email protected]) 0950 GMT [Dow Jones] Liberum Capital initiates coverage of Sainsbury (SBRY.LN) with a hold rating and 340p target. "Profitability is now only modestly below the mid 1990's peak whilst margins are expanding consistently," the Liberum says. However Liberum says a difficult UK environment, higher profit base level and capital intensity suggest modest medium-term growth. Liberum says the Qatar Investment Authority will remain a long-term shareholder. Shares flat at 327p. ([email protected]) 0944 GMT [Dow Jones] Exane analyst Ian Gordon says UK banks should feel "cautiously relieved" by the tone and content of Chancellor George Osborne's speech to City executives Wednesday night, which laid out plans to fold the supervisory powers of the FSA into the Bank of England and named John Vickers as head of the commission that will review whether banks need to be broken up. Gordon says the "worst outcome" seems to already be priced into Barclays (BCS) shares, the bank that would be most affected by a break-up. ([email protected]) 0936 GMT [Dow Jones] Liberum Capital initiates coverage on William Morrison (MRW.LN) with a hold rating and 285p target price. "We would expect the new CEO to consider opportunities to enhance growth across the existing network and in this context may revisit the group's low non-food offer and lack of an online presence," the broker says. Shares flat at 264p. ([email protected]) 0848 GMT [Dow Jones] UK banks should benefit from the positive tone of Chancellor George Osborne's and Bank of England Governor Mervyn King's Wednesday night speeches to City executives, says RBS banks analyst, who recommends buying their shares. One particular point of interest was the apparent de-emphasis on breaking up commercial and investment banks, with King instead putting more weight on orderly bankruptcy procedures and living wills, the analyst says. ([email protected]) 0828 GMT [Dow Jones] WS Atkins (ATK.LN) FY figures are good says Arden Partners. It notes normalized pretax profits of GBP96.5M versus the brokerage's forecast of GBP90M. Of key importance is the fact that Atkins has been actively cutting its cost base for some time, says Arden. Arden says Atkins is very well run and top quality, but Arden's recommendation remains sell. "The P/E to March '11 is 11.1x. This is too high in our view given the outlook for infrastructure investment in the UK." Shares 3.7% at 700p. ([email protected]) 0800 GMT [Dow Jones] Land Securities' (LAND.LN) forward sale of the Park House development de-risks the development pipeline and offers the potential for a more compelling return at a low risk, says Evolution Securities. Says "the sale price of GBP250M represents a GBP33M premium to the total development costs incurred to date and represents a 15% profit on cost." Maintains add rating and target price at 700p. Shares flat at 629p. ([email protected]) 0733 GMT [Dow Jones] Stagecoach Group's (SGC.LN) winning of an arbitration ruling is a strong positive and brings more certainty around full-year profitability, says an analyst. The ruling is related to the timing of assessing revenue shortfalls in this fiscal year, affecting subsidies Stagecoach receives for running the South Western trains franchise. A related ruling on car park revenue against Stagecoach is less important, the analyst says, as that one is worth much less than the revenue timing issue had been. Shares +0.9% at 188p. ([email protected]) 0732 GMT [Dow Jones] KBC Peel Hunt initiates coverage on Misys (MSY.LN), with a buy rating and 300p target price. "Misys has a high quality management team and looks to have achieved a good balance between cost control and investment in new products. A global footprint and high level of recurring revenues helped the company to show resilience during the downturn," analyst Paul Morland says. He anticipates a period of strong earnings growth as bank spending recovers, noting Misys "capitalises on its dominant global position and reaps the rewards of operational gearing and strong cash conversion." Shares -0.5% at 255p. ([email protected]) 0730 GMT [Dow Jones] HSBC initiates coverage of Cobham (COB.LN) and BAE Systems (BA.LN) with neutral ratings 250p and 350p price targets, respectively. HSBC notes governments across the world are experiencing severe fiscal pressure as a result of stimulus spending and bailout efforts. The bank says investors fear the current slowdown in spending will become a downturn, and this has put presure on sector valuations. "Ultimately, we think a sector re-rating will depend on the direction of global defence budgets." Cobham shares -0.1% at 234p and BAE -0.6% at 324p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 17, 2010 06:24 ET (10:24 GMT)