UK MARKET TALK ROUNDUP: BROKERS COMMENTS

27th Jul 2010 12:30

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] 1130 GMT [Dow Jones] Informa's (INF.LN) 1H results are solid, says Investec Securities. It notes revenues and underlying growth are in-line, with strong margin performance in the Events and Training business helping Ebita to come in ahead of expectations. "The outlook statement remains cautious," although the comment that trading is set to be 'in-line' for the year "feels overly cautious to us; we expect to increase our FY'10 EPS estimate by at least 4%, to around 35p." Keeps the stock at buy with 457p target. Shares +2.1% at 396p. ([email protected]) 1121 GMT [Dow Jones] Daily Mail & General Trust's (DMGT.LN) 3Q update is good, with a decent performance across the board, says Investec Securities. It notes underlying revenue growth of 6% is materially ahead of the flat performance Investec had modelled. Investec says the stock remains a key media pick, offering a potential 38% total return to the brokerage's 671p price target. Keeps the stock rated buy. Shares flat at 499p. ([email protected]) 0920 GMT [Dow Jones] UBS raises Pearson (PSON.LN) price target to 1300p from 1250p following a robust presentation by the company's management on the increasing opportunities for growth and the potential for improving profitability. Notes Pearson continues to undertake restructuring across most divisions and the resulting savings should drive margin expansion and fund ongoing digital investment to maintain the group's market leadership. UBS adds that education growth drivers are intact. Raises '10 EPS estimate to 74.3p from 71.3p and '11 EPS estimate to 73.8p from 70.5p. Keeps the stock at buy. Shares flat at 1029p. ([email protected]) 0909 GMT [Dow Jones] Goldman Sachs cuts William Hill (WMH.LN) price target to 235p from 257p following the company's 2Q trading update. The net impact is a reduction in group EBIT forecast by 3.5% to GBP257.4M in '10 and by 6.9% to GBP259.0M in '11. Says a strong World Cup contribution, partially offset by a particularly poor Royal Ascot, results in a run-rate net revenue decline of -1% in licensed betting offices for the first half, below Goldman's expectations. Says this is partially compensated for by the strength of the online business. Continues to prefer William Hill versus Ladbrokes (LAD.LN), rated neutral. Keeps buy recommendation. Shares +0.1% at 174p. ([email protected]) 0909 GMT [Dow Jones] BP (BP) +0.5% at 419p, following the release of 2Q results. Overall the statements are positive, says Collins Stewart, as although it announced major charges for the US spill, BP's free cash generation and balance sheet position remain strong. Says the succession of CEO Tony Hayward by Bob Dudley had been well flagged in recent days, but we think it should help BP start to rebuild key relationships in the US. Sees further near term upside in BP's shares if it can fully seal the Macondo well in the next few weeks, "but we do not see that much clear value beyond the 450p level." Has a buy rating, with 450p target. ([email protected]) 0839 GMT [Dow Jones] Provident Financial's (PFG.LN) GBP54 million pretax profit for the first half exceeds expectations says KBC Peel Hunt. It was helped by higher contribution from Vanquis Bank says says KBC. "While growth remains moderate we consider that management are pursuing the correct strategy that will allow the group to take advantage of what we consider to be a structural growth opportunity, driven by the absence of credible competition in the subprime market, when economic conditions are right," says KBC. It adds that Provident maintains its cautious approach to lending and a robust balance sheet. Buy rating, 975p target. Shares -7.9% at 812p. ([email protected]) 0802 GMT [Dow Jones] Xstrata (XTA.LN) first half output report "doesn't appear to contain material divisional disappointments," unlike BHP (BHP) and Rio Tinto (RTP), says Liberum Capital. On the positive side, coking coal output is up 73% and the switch from thermal coal output to higher margin semi-soft output saw semi-soft jump 50%, the bank adds. Meanwhile copper production only fell 3% in the first half of the year compared to an 18% drop at Rio Tinto and 5% drop at BHP, Liberum says. The miner should also benefit from higher coking coal prices, the bank adds. Liberum has a buy rating on the stock. Xstrata -0.2% at 1035p. ([email protected]) 0731 GMT [Dow Jones] BP (BP) is moving aggressively to position itself for the tough times ahead, says Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, while significant challenges remain. "The triple-pronged approach of increased provisions, asset sales and a new CEO should be a potent mix in forming a strong future foundation." The underlying 2Q trading performance is robust with a significant improvement having been made on a like-for-like basis. Shares are -0.1% at 416p and the unknown costs and timing of litigation will continue to be a headwind on further price appreciation, adds Hunter. ([email protected]) 0719 GMT [Dow Jones] Morgan Stanley cuts Aquarius Platinum (AQP.AU) price target to 462p from 493p. Says new safety norms for mechanised mines have created uncertainty over the operating parameters at Aquarius's Marikana and Kroondal mines. This follows new regulations by South African regulators intended to improve safety standards in the country's platinum mines. "Ambiguity on initial orders, leading to market fears of a near-term production halt at non-compliant mines, has been clarified, but market confidence in the cost and volume parameters remains low." Keeps the stock at overweight. Shares +2.2% at 285p. ([email protected]) 0707 GMT [Dow Jones] Bernstein Research lifts Pearson (PSON.LN) target to 1275p from 1050p, and keeps an outperform rating. Says a "combination of market share gains driven by superior scale and relentless focus on the elements of the portfolio which afford the best opportunity for growth means that the company is now on a trajectory for steady upgrades in performance." Notes share gains across Pearson, most significantly in Education, have helped produce record first half results. Shares +0.7% at 1036p. ([email protected]) 0702 GMT [Dow Jones] Tomkins (TOMK.LN) has agreed to be acquired by an investment vehicle established by Canadian private-equity firm Onex Corp. and the Canada Pension Plan Investment Board for about GBP2.89B. "With any other party likely to be far behind in terms of due diligence, 325p a fair price in our view," says Arden Partners. It adds that with "no likely industrial buyer capable of offering greater synergies, we do not see any counter bid as likely and would look to sell shares over 320p." Says the acquisition is 325p through a scheme of arrangement which is expected to become effective towards the end of September. Shares closed at 308p. ([email protected]) 0655 GMT [Dow Jones] African Barrick Gold's (ABG.LN) 2Q results were not as good as expected, as quarter on quarter production was only slightly higher, costs were up and earnings were down, says Numis analyst Cailey Barker. "Not a great quarter from them." Comments the company appears to be making progress with controlling costs and increasing production "but slower than expected." Says he will retain his add recommendation, but may lower his target from the current one of 685p. African Barrick Gold shares closed Monday at 550p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 27, 2010 07:30 ET (11:30 GMT)