UK MARKET TALK ROUNDUP: BROKERS COMMENTS

22nd Jul 2010 10:13

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] 0913 GMT [Dow Jones] Kingfisher's (KGF.LN) second-quarter update is a "mixed bag," Investec Securities analyst David Jeary says. Sales were generally weaker than forecast, apart from in France, Jeary says. He doesn't see consensus for full-year pretax profit of GBP693 million changing at this stage, but says foreign currency effects could yet have an impact. Hold rating and 235 pence target. Shares -1.4% at 220p. ([email protected]) 0823 GMT [Dow Jones] Lonmin (LMI.LN) is running short of its annual platinum sales target of 700,000oz, says Ambrian Partners. Ambrian estimates 316,000 oz of platinum in concentrate would need to be smelted in 4Q to meet the target, supposing the miner aims to maximise profits via smelting and refining its own ore. "This is unlikely to be achieved," Ambrian says. "We think that at best, you could only expect the company to perhaps refine 270,000 during a quarter," prompting Lonmin to miss its target by 46,000 ounces or 7% of its refined target. The miner can either sell the concentrate onto a third party and incur $9 million less in revenue or it could keep the inventory to process itself in 1Q11 and take a hit on missing its target, says Ambrian. Lonmin -0.6% at 1431p. ([email protected]) 0728 GMT [Dow Jones] Lonmin's (LMI.LN) 3Q output report is in line with expectations, says a London-based analyst. "They're pretty boring...but boring is good" for this company, the analyst says. The mining side of the business is sending a steadily improving amount of ore to the smelters but the smelters suffered a setback in the previous quarter. As a result, refined platinum production is down 47% at 91,952 troy ounces in the third quarter compared with the same period a year ago. Lonmin is keeping its full-year platinum sales guidance of 700,000 ounces but most likely selling 100,000 oz in the form of metal in concentrate and tolling. Lonmin -0.8% at 1428p. ([email protected]) 0703 GMT [Dow Jones] Autonomy's (AU.LN) 2Q revenue and ebitda are in-line, Panmure Gordon analyst George O'Connor says. EPS is below his own and consensus expectations. Otherwise "business [is] tracking along fine," with good cash collection, up 64% year-on-year, although revenue is lower than expected. The outlook statement is "OK," with lots of pent-up demand. Guidance is unchanged, as expected. The "Mix of lower gross margin, higher interest change and lower tax," mean O'Connor will trim his 2010 EPS estimate to 119.4c from 125.9c and revenue to $898.4m from $900m. Target price falls to 1975p from 2149p. Hold rating. Shares closed Wednesday at 1813p. ([email protected]) 0700 GMT [Dow Jones] Great Portland Estates (GPOR.LN) reports on a strong 1Q in its interim management statement, says Execution Noble. Says capital values rise by 4.6% in 1Q on 2.3% rental growth in the period. As a result of the update, Execution thinks its full-year NAV forecast of 307p arguably now looks a little conservative given the capital/rental growth booked in 1Q. Says the company merits its premium to the sector. Retains buy recommendation. Shares closed on Wednesday at 302p. ([email protected]) 0659 GMT [Dow Jones] Pearson (PSON.LN) makes first move into Latin America with purchase of Sistema Educacional Brasileiro's learning systems business for GBP326m in cash, RBS analyst Paul Gooden says. "Acquiring SEB (one of Brazil's leading educational companies), looks like a sensible step as it reinvests some of the cash flows from the IDC disposal and seems to have been done on reasonable terms (EPS enhancing in 2011, ROIC enhancing from 2012)," he says. Gooden has a hold rating on Pearson and 865p target price. Stock closed at 934p Wednesday. ([email protected]) 0656 GMT [Dow Jones] Credit Suisse upgrades Northern Foods (NFDS.LN) to outperform from neutral, but cuts its target price to 55p from 70p. Lowers current year pretax profit forecast by 4% to GBP38.5M, saying Northern's seemingly hard-nosed attitude to retailers comes at some cost - cash costs of closing plant and no growth in the on-going business. Says return on assets and margins may have gone up, but EPS and the shares have not. However, "on 2011E 7.4x earnings and with a 10% yield Northern shares simply look too cheap," hence the upgrade. Shares closed at 47p Wednesday. ([email protected]) 0654 GMT [Dow Jones] Deutsche Bank nudges up Colt Group (COLT.LN) target to 150p from 145p following the release of the company's 1H results and to reflect a higher cashflow valuation. Says the results are in line with the brokerage's expectations for revenues and Ebitda. Says free cash flow is below Deutsche's estimates but thinks this should substantially improve in 2H, though anticipates some extra outflows as new contracts absorb additional cash. Is encouraged by management commentary regarding positive signs in the market indicating an improvement in the second half and into '11, and that contracts signed in 1H will start to flow through to revenues. Keeps at hold. Shares closed at 130p Wednesday. ([email protected]) 0653 GMT [Dow Jones] Imperial Tobacco (IMT.LN) 3Q update is "a little bit disappointing volume-wise," says David Hayes at Nomura. He says nine-month figures suggest a 3Q decline in white-stick equivalent volumes of 5%. "They were hoping for more stable volumes in the 2H," Hayes says. While some of the decline in white-stick equivalent volumes was due to market shares declines in countries like Russia, there were also market share losses in Spain. Hayes says price rises should still offset the declines, but the company is "a little bit less comfortable than it was." Buy rating. Shares closed Wednesday at 1908p. ([email protected]) 0649 GMT [Dow Jones] Mitchells & Butlers (MAB) trading looks "slow but that's principally down to negative impact of the World Cup, says Shore Capital's analyst Greg Johnson. He adds the pub group wouldn't have benefited on good weather on April and May but says that retail third-quarter margins are improving, which is better than the consensus view that it would be flat. Has a sell recommendation. Shares closed Wednesday at 303p. ([email protected]) 0649 GMT [Dow Jones] Tate & Lyle PLC's (TATE.LN) interim trading statement "is pretty neutral," says Investec Securities analyst Martin Deboo. Says: "I wouldn't have thought it provided much fuel for upgrades. Given the run the stock has had, I feel it's a pretty neutral statement. All the reported trends and events are in line with what we would have expected." Tate & Lyle said it expects continued steady demand for its speciality food ingredients. Deboo says the company's shift towards speciality ingredients and disposal of sugar operations is "generally correct, but it all comes down to the execution of the strategy." Keeps buy rating and 550p target price. Shares closed Wednesday at 468p. ([email protected]) 0644 GMT [Dow Jones] Capita Group's (CPI.LN) half-year results are in line with expectations and pretax profit a shade ahead of consensus forecasts says an analyst. In particular the company's bid pipeline is up at GBP4.4B, versus GBP3.7B in February '10, which will be well received by the market, Thursday, says the analyst. The company says pressure on pubic spending may affect growth in the short term in a small number of areas, but at the same time, the need for its public sector clients to achieve substantial cost efficiencies offers several opportunities for the group. Shares closed Wednesday at 710p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 22, 2010 05:13 ET (09:13 GMT)