UK MARKET TALK ROUNDUP: BROKERS COMMENTS

12th Jul 2010 16:02

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] 1502 GMT [Dow Jones] Rio Tinto's (RTP) arbitration process with Ivanhoe Mines Ltd (IVN.T) is unlikely to have any material effect on the development of the Mongolian Oyu Tolgoi copper project, says a London-based analyst. He says Rio Tinto is referring Ivanhoe's shareholder rights plan to arbitration because it believes the plan restricts Rio's ability to increase its stake in Ivanhoe, the analyst says. He notes that Rio is trying to keep its options open in the event it decides to increase its stake in the company beyond the 46.6% cap. Rio currently owns 29.6% in Ivanhoe. Rio Tinto -2.2% at 3102p. ([email protected]) 1249 GMT [Dow Jones] ING cuts Michael Page International (MPI.LN) price target to 520p from 540p to reflect slightly more cautious recovery scenarios for FY'11. Says this accounts for potentially lower economic growth from government savings in Continental Europe and the UK. Nevertheless, the brokerage notes Michael Page's strong 2Q trading update and says this underscores its buy rating on the stock, as well as its top pick status within the sector. Adds the valuation has become highly attractive. Shares -0.4% at 392p. ([email protected]) 1133 GMT [Dow Jones] Altium Securities increases Domino's Pizza (DOM.LN) price target to 550p from 500p after delivering interim results ahead of expectations. Says the "excellent" results are bolstered by a number of short-term value-led promotions. Currently models '10 EPS growth of 18.7% but thinks this could surpass 20%. Says, "Domino's is in great shape, current momentum is very strong and although the group faces some very tough comparatives in 2H, we remain confident that it will surpass them." Keeps at buy. Shares are -1.5% at 397p. ([email protected]) 1116 GMT [Dow Jones] KBC Peel Hunt raises its Domino's Pizza (DOM.LN) price target to 485p from 400p following the company's update. Like-for-like sales growth of 17.2% in 2Q is spectacular in any terms, even if it was partly helped by the World Cup. "What this really shows is that Domino's is right at the centre of its market opportunity." With such core strength, KBC is confident there is still upgrade potential. Keeps the stock at buy. Shares -1.3% at 398p. ([email protected]) 1111 GMT [Dow Jones] Credit Suisse cuts Elan Corp (ELN.DB) price target to EUR6 from EUR7 ahead of the 2Q results due July 22. The brokerage widens its loss per share forecast to a loss of $0.21 from a previous forecast of a loss of $0.17. The key focus in the results will be, as always, Tysabri sales, says CS. Neutral recommendation. Shares are +1.3% at EUR4.0.([email protected]) 0939 GMT [Dow Jones] Citigroup raises Bodycote (BOY.LN) price target to 180p from 160p following the company's positive trading update. It notes the update highlights that FY'10 Ebit is expected to be significantly above the top of the current range. The brokerage raises its '10 EPS estimate to 13.4p from 10.5p and '11 EPS estimate to 19.9p from 19.5p. Nevertheless, it reckons the positive update is already in the valuation, adding that normal seasonal weakness is likely to impact 2H'10. Keeps at sell. Shares -0.5% at 217p. ([email protected]) 0814 GMT [Dow Jones] Royal Bank of Scotland downgrades Stagecoach (SGC.LN) to sell from hold and cuts the price target to 165p from 190p. Thinks rail-related upgrades, which have underpinned share price performance since mid-'09, may now be nearing an end. As a result, says Stagecoach's exposure to potential government spending cuts will come into focus. Estimates that 92% of group FY '10 profits were derived in the UK and as such, Stagecoach is one of the most domestically-exposed groups among its peers. Consequently, says Stagecoach's premium rating will come under pressure. Shares flat at 184p. ([email protected]) 0651 GMT [Dow Jones] Thomas Cook Group's (TCG.LN) acquisition of German tour operator Oger Tours "makes sense strategically" as the operator takes advantage of needed consolidation in the important German market, says Numis Securities analyst Wyn Ellis. Adds, however, that EUR30M deal is small and unlikely to move shares. Stock closed Friday at 192p. ([email protected]) 0637 GMT [Dow Jones] JPMorgan Cazenove upgrades Stagecoach (SGC.LN) to overweight from neutral, following a better-than-expected FY '10. Also upgrades on the possibility of a significant capital return to shareholders, assuming no acquisitions present themselves. Sees about 20% upside to the 218p price target. In general for UK public transport, says uncertainty about the impact of the spending review is likely to persist until the outcome of the review is known in the autumn. But thinks public transport operators will be able to cope with cutbacks as long as they are introduced gradually. Stagecoach shares closed Friday at 184p. ([email protected]) 0627 GMT [Dow Jones] Citigroup upgrades Michael Page (MPI.LN) to buy from hold and lifts the price target to 460p from 400p. This follows the company's results, with accelerating gross profit in 2Q '10, up 33% year-on-year or 14% sequentially. This compares to a 7% sequential improvement in 1Q '10, says Citi. It says the operations in the UK has turned a corner and have seen a slight improvement in Europe. It adds that the investment in emerging markets is paying off. Citi lifts '10 EPS forecast to 15.2p from 11.6p and '11 to 32.4p from 30.6p. It notes recent share price weakness. Shares closed Friday at 393.4p.([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 12, 2010 11:02 ET (15:02 GMT)