UK MARKET TALK ROUNDUP: BROKERS COMMENTS

10th Jun 2010 16:49

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] 1549 GMT [Dow Jones] Westhouse Securities increases target prices for Falkland Islands oil explorers Rockhopper Exploration (RKH.LN) and Desire Petroleum (DES.LN) to 663p and 139p, respectively, from previous targets of 404p and 101p. Says the upgrades follow an upward revision of its estimates for the value of oil per barrel at the companies' prospects, sterling's decline against the dollar and Rockhopper's Sea Lion discovery. Rates both companies buy, with a preference for Rockhopper. Notes contingent resources at Sea Lion account for roughly 70% of its Rockhopper target price. Rockhopper shares -2.3% at 279.5p. Desire shares -3.4% at 86p. ([email protected]) 1235 GMT [Dow Jones] KBC Peel Hunt initiates Invensys (ISYS.LN) at sell, with 245p price target. Says recent strong cash conversion has strengthened the balance sheet and, with 40% of year-end orders from emerging markets, the group looks well positioned for growth. Says if Invensys can execute on its strategy and deliver the combined attractions of sustained growth and low cyclicality, there is scope for multiple expansion. However, KBC says consensus EPS forecasts are around 20% too high. Shares +0.3% at 278p. ([email protected]) 1007 GMT [Dow Jones] Panmure Gordon cuts ReneSola (SOLA.LN) price target to 300p from 360p. ReneSola remains confident, with pricing and volumes likely to stay strong through to 3Q, says Panmure. But Panmure thinks investors are spooked by the weak euro and continued uncertainty over medium-term pricing. It says ReneSola's shares are undervalued and that strong results should continue to provide positive catalysts. Has the stock at buy. The shares are trading flat at 189.3p. ([email protected]) 0949 GMT [Dow Jones] Panmure Gordon lifts IG Group (IGG.LN) price target to 500p from 475p following the pre-close trading update. Says revenues in Japan finally look like they are moving upwards. Says this is important for sentiment given the underperformance of this area of this business since acquisition. Lifts '10 EPS forecast to 31.5p from 28p and '11 to 33.2p from 31.2p. Expects market volatility to persist, which should benefit FX and index volumes, and may create scope to upgrade estimates. Maintains buy rating. Shares -1.0% at 427p. ([email protected]) 0940 GMT [Dow Jones] Silverdell (SID.LN) shares rise 14% to 9p following 1H results. Collins Stewart says results are "impressive" and despite broadly flat revenue, points to 25% increase in gross margins. "We believe that the group's desire to capitalise on the reputation and customer relationships of Silverdell will help to spur top-line growth," says analyst. Adds company remains on track to reduce net debt over current financial year. Keeps buy rating and 16p target price. ([email protected]) 0824 GMT [Dow Jones] Panmure Gordon raises ASOS (ASOS.LN) price target to 790p from 735p following Wednesday's preliminary results. It raises '11 revenue forecast growth to 36% from 28%, due to higher-than-expected active user numbers. It notes that international growth continues apace and so, raises international revenue growth forecast for '10-'14E to 37.8% from 32.2% compound. Also, UK market share continues to grow in spite of sustained competitive pressure from retail majors. Panmure lifts '11 EPS forecast to 24.4p from 24.2p, '12 to 33.7p from 32.0p. Has buy recommendation. Shares -2.3% at 711.5p.([email protected]) 0751 GMT [Dow Jones] BP (BP) should cuts its dividend to mollify political outrage in the US over its Gulf of Mexico oil spill, says NCB Stockbrokers analyst Peter Hutton. "BP has been late to recognize the critical political sensitivity of the dividend and should already have announced a cut but not a complete suspension," he says. "It should not have expected to keep its distribution to shareholders untouched by such a major event." Other companies will start to take a serious look at BP as a takeover target following Thursday's share price collapse, he adds. Gives hold rating, 460p target. Shares -6.7% at 365p. ([email protected]) Contact us in London. +44-20-7842-9464 [email protected] 0745 GMT [Dow Jones] BP (BP) -5.9% at 368p, continuing to be pressured by the circumstances surrounding the Macondo spill. The uncertainty surrounding the dividend is also weighing, says Morgan Stanley and the share price reaction is telling BP's board to show its hand quickly, rather than waiting for the 2Q results on July 27, both on the payout policy and to provide a clearer line on the payment of future liabilities. Morgan Stanley says investors also want to see the board reiterate confidence in the management team. It says clarity on these issues should support a significant bounce away from its 320p-365p/share bear case range. Overweight rating, 600p target. 5-yr CDS widen to 552 bps, from a close in NY of 386 bps, but Morgan Stanley points to $15B of short-term cash lines. ([email protected]) 0737 GMT [Dow Jones] The upward revision to Japan's 1Q GDP may have helped to lift the JPY a little. But it isn't surprising that the currency hasn't been able to get much upward momentum even though the GDP deflator didn't fall as much as expected either, says Commerzbank. "A year-on-year fall of 2.8% does mean that deflationary tendencies are still very much in evidence," the bank warns. ([email protected]) 0736 GMT [Dow Jones] Europe opens to a stronger euro thanks in part to China saying the single currency should weather its current storm. China May exports came in at a super-strong +48.5% year-on-year, which along with better than expected Australian jobs data boosted the AUD, which in turn helped the risk currencies rise. Other overnight events saw the RBNZ hike rates by 25bps as widely expected and the Fed's Beige Book was upbeat with all 12 regions reporting growth. For Thursday, attention turns to the ECB's press conference as both the BOE and ECB rate decisions are expected to be non-events. For the currencies EUR/CHF seems to have found a base above Wednesday's all-time 1.3735 low and USD/JPY dip below 91.00 may find some bargain hunters. ([email protected]) 0734 GMT [Dow Jones] Continue to sell risk currencies on rallies, says Credit Agricole. The bank notes despite the improvement in market sentiment on the upbeat comments from Fed Chairman Bernanke and the Beige Book as well as the sharp rise shown in Chinese export data overnight, appetite for risk is not being sustained. "A host of worries including concerns surrounding BP as it comes under increased US government pressure, saw equities reverse course, undoing the effects of the positive news earlier," the bank says. ([email protected]) 0733 GMT [Dow Jones] Gilts are higher Thursday as equities open weaker. Movements in gilts have been extremely sensitive to share prices of late and the trend continues. The BOE will announce its rate decision at 1100 GMT but that's likely to be a non-event, with no change expected in rates or the bank's government bond purchases. September gilts are up 0.27 at 119.40 and the benchmark 10-year gilt is up at 110.311 to yield 3.49%. ([email protected]) 0729 GMT [Dow Jones] The Hungarian forint is stable versus the euro as markets are still digesting Hungary's economic program and demand further details. EUR/HUF is 281.4 from 281.1 late Wednesday. Market sentiment in the emerging European market is slightly negative, with "the only light in the gray sky is the clear improvement in Hungary where default worries have always been far-fetched," CA-CIB says. Brokerage Equilor sees EUR/HUF remaining above 280 as long as details of the government's program remain in the dark. ([email protected]) 0728 GMT [Dow Jones] The mining tax exocet that hit the AUD last month may have inflicted irreparable damage to the currency, according to Nicholas Hastings in Forex Focus. Since the tax was announced at the start of May, the Aussie has fallen about 11% against its US counterpart. Apart from stirring domestic outrage, the tax appears to have triggered concern among international investors, who have been selling Australian stocks every day since the announcement. ([email protected]) 0724 GMT [Dow Jones] Malaysia government bonds lower late, weighed by market talk that the central bank may be placing out MYR3 billion new June 2020 GII or Islamic bond privately, says dealer with local bank. "If the rumor is true, then it will mean less appetite for other bonds and that is hurting sentiment," says dealer; adds, muted impact from details of 10th Malaysia Plan, industrial output data. Yields on April 2011 MGS +3 bps at 2.77%, July 2013 MGS +1 bp at 3.32%, August 2015 MGS +1 bp at 3.59% and November 2019 MGS +3 bps at 4.08%.([email protected]) 0723 GMT [Dow Jones] China government bonds end lower on larger-than-expected trade surplus in May, which indicates PBOC may step up fund-withdraw efforts in open market operations to absorb excess liquidity brought by huge trade surplus, says Shanghai-based analyst with local insurer; adds worries about rising inflationary pressure also weigh on bond prices. China will release May CPI tomorrow; Dow Jones poll tips May CPI +3.0%, faster than April's 2.8% growth. Shanghai exchange government bond index ends at 125.34 vs 125.38 last close.([email protected]) (MORE TO FOLLOW) Dow Jones Newswires June 10, 2010 11:49 ET (15:49 GMT)