UK MARKET TALK ROUNDUP: BROKERS COMMENTS

23rd Jun 2010 09:45

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] 0845 GMT [Dow Jones] Morgan Stanley adjusts target prices on UK miners, following new quarterly commodity forecasts. "Although the order of magnitude of the earnings changes is lower than in previous quarters, we focus investors' attention on the relatively undemanding valuations." Raises African Barrick Gold (ABG.LN) price target to 733p from 678p, Anglo American (AAL.LN) target to 3373p from 3274p, Ferrexpo (FXPO.LN) to 408p from 406p, and New World Resources (NWR.LN) to 844p from 839p. Has the first three stocks at overweight, and New World Resources at equalweight. Morgan Stanley cuts Antofagasta (ANTO.LN) target price to 1019p from 1042p, Aquarius Platinum (AQP.AU) to 493p from 497p, Kazakhmys (KAZ.LN) target to 1768p from 1807p, and Lonmin (LMI.LN) target to 2047p from 2065p. Also cuts Vedanta Resources (VED.LN) price target to 4238p from 4272p, and Xstrata (XTA.LN) to 1571p from 1581p. Has all stocks at overweight, apart from Antofagasta at underweight and Lonmin at equalweight. ([email protected]) 0842 GMT [Dow Jones] Goldman Sachs nudges up Halma (HLMA.LN) price target to 319p from 314p. Says the company's annual results are broadly in line. Sees the new margin guidance from Halma as a small net positive, signaling confidence over retention of cost saving measures taken during FY '09/'10. However, suspects much of the positive news on the medium-term margin outlook is priced in. Keeps a sell rating. Sees 18% upside to the 12-month price target. Shares are -0.2% at 275p. ([email protected]) 0834 GMT [Dow Jones] UBS cuts Southern Cross Healthcare (SCHE.LN) price target to 100p from 135p. It says the UK council tax freeze announced in Tuesday's Budget will increase pressure on local authorities to economise on social care spending, making any residential care home fee inflation unlikely in the medium term. The brokerage cuts its April '11 and April '12 public fee growth forecasts to 0% from 1.2%. And it also cuts its FY'11 EPS estimate to 13p from 15.2p. Still, Panmure reckons the company's recovery strategy will mitigate the impact of public fee pressure in the near to mid term. Buy rating. Shares +1.1% at 45p. ([email protected]) 0833 GMT [Dow Jones] St James's Place (STJ.LN) will be the biggest beneficiary amongst the UK life insurers from Tuesday's emergency budget says Panmure. Its share price had reacted badly to previous plans to curb pension tax relief for higher- rate tax payers and the proposed capital gains tax changes, with the share price about 20% lower than it was in November '09 when those issues were first highlighted. Panmure says key positives are pension tax relief, CGT not biting as hard as first anticipated and confirmation of the abolition of compulsory annuitization at 75 years. Buy ratig, 345p target. Shares are -1.1% at 222.5p. ([email protected]) 0746 GMT [Dow Jones] BP's (BP) $20B claim fund, net fines/penalties and clean-up costs announced last week are now included in ING's models, so the bank now assumes some $28.1B of total non-operating items over '10/'11 for the Gulf of Mexico catastrophe, versus $5.33B previously. ING keeps its target price at 712p, "albeit given the continued turmoil, political vilification and somewhat orchestrated media onslaught for BP, we accept this should be considered as a 1-3 year target level rather than a 12-month view." Nonetheless, ING still thinks BP offers very good deep value. Buy rating. Shares +088% at 337p. ([email protected]) 0659 GMT [Dow Jones] HSBC raises Whitbread (WTB.LN) target price to 1760p from 1690p following the company's 1Q results. The results show Whitbread outperforming recovering markets and the bank expects further market share gains from well-defined organic expansion and brand investment. It raises FY'11 pretax profit estimate by 4.5% to GBP263M, on better occupancy assumptions and to allow further headroom depending on the broader economic recovery. Overweight rating. Shares closed Tuesday at 1531p. ([email protected]) 0657 GMT [Dow Jones] Kesa Electricals' (KESA.LN) FY results are ahead of expectations, says an analyst. The analyst notes adjusted pretax profit of GBP81.9M, versus market expectations of GBP76M. The analyst also notes the unexpected increase in the final dividend and the announcement of a change in reporting currency to euros. However, the analyst says there is scant detail on the company's strategic roadmap. Shares closed Tuesday at 117p. ([email protected]) 0656 GMT [Dow Jones] Kesa's (KESA.LN) FY results are ahead of expectations, says Shore Capital. Says the beat is largely down to its French figures, while all other divisions report EBIT in line with Shore's forecasts. Notes there are few details on management's new strategy apart from increasing web penetration, maximizing cross channel approach and differentiating its service offer. Looks for more details at the morning's analyst meeting. While there may be some short-term relief on these results, thinks the debate over whether Comet can remain profitable will continue. Maintains hold recommendation, preferring DSG International (DSG.LN), rated at buy. Kesa closed Tuesday at 117.4p. ([email protected]) 0649 GMT [Dow Jones] U.K. banks will have to pay a combined GBP1.1 billion next year and GBP1.9 billion in 2012 in new taxes imposed by the U.K. government, JP Morgan estimates. Adds this is 4% and 5% of group earnings for those years, respectively. Says the levy is "less punitive" than expected, with a cut in U.K. corporate tax rate partially offsetting the expense. ([email protected]) 0646 GMT [Dow Jones] Stagecoach's (SGC.LN) FY results are significantly ahead of expectations, says KBC Peel Hunt. Notes FY pretax profit of GBP161.3M and EPS of 18.7p versus the brokerage's forecast of GBP143M and 16.7p. "Improving momentum, continuing balance sheet strength, and management's ambition continue to suggest upside for the share price." Adds, however, the main interest is in potential major acquisitions, which were not addressed. Has the stock at buy, with 220p price target. Shares closed Tuesday at 191p. ([email protected]) 0643 GMT [Dow Jones] Stagecoach's (SGC.LN) FY preliminary results are ahead of consensus forecasts, with pretax profit coming in at GBP161.3M versus consensus of about GBP150M, says an analyst. Notes the UK bus business remains robust and margins are good, while the revenue trend in North America also looks like it is improving. Says current trading remains in line with management's expectations. Shares closed on Tuesday at 190.6p. ([email protected]) 0631 GMT [Dow Jones] Kesa Electricals' (KESA.LN) FY adjusted pretax profit, for the year ended April 30, of GBP82M is ahead of expectations, says Arden Partners. Adds the dividend increase is a pleasant surprise. "The commitment to eliminate the near GBP30M of start-up losses by the end of '11/'12 is also welcome," it adds. Says the shares should take the news well. Has the stock at add, with 130p price target. Shares closed Tuesday at 117p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 23, 2010 04:45 ET (08:45 GMT)