UK MARKET TALK ROUNDUP: BROKERS COMMENTS

6th Jul 2010 12:42

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] 1142 GMT [Dow Jones] Investec Securities cuts Smith & Nephew (SN.LN) price target to 630p from 757p. Investec lowers the PER it uses to value the shares to 13x from 15x, to reflect changing market conditions. It notes recent downgrades, combined with weak market conditions have led to Smith & Nephew being de-rated in the market. "Whilst we think a degree of caution is appropriate given global healthcare funding pressures, we remain of the view that Smith & Nephew is geared into the economic recovery." Keeps the stock at buy. Shares +0.3% at 582p. ([email protected]) 1010 GMT [Dow Jones] Balfour Beatty's (BBY.LN) 1H trading update is solid, says Pamure Gordon. The contract momentum has been positive, integration of Parsons Brinckerhoff business is going well and its broad spread of activities and geography gives it greater resilience relative to its peers, says Panmure. The brokerage believes the company retains a strong presence in the important infrastructure and energy markets. "With an attractive absolute and relative valuation, we remain buyers." 330p target. Shares +2.8% at 243p. ([email protected]) 1002 GMT [Dow Jones] Persimmon's (PSN.LN) outlook statement is noticeably hesitant, says Investec Securities. In the short term, it's best to avoid the stock and the sector, says Investec. "We believe the housing market has lurched down in recent weeks according to our meetings with the industry." However, Investec still has a buy rating, although it says this is on a long-term basis. 414p target. Shares +6.5% at 371p. ([email protected]) 0959 GMT [Dow Jones] BP (BP) shares +3.4% at 344.5p, still gaining after the weekend news concerning the possibility of a strategic investor coming on board, notes David Jones, Chief Market Strategist, IG Index. Today's news that BP won't be issuing any more shares has calmed any nerves brought on by worries that its value would be diluted and keeps the bargain hunters happy, adds Jones. And on top of this, is the boost from an upgrade to buy from RBS, citing a favorable risk/reward balance. ([email protected]) 0946 GMT [Dow Jones] Investec Securities lifts Anite (AIE.LN) price target to 42p from 38p following the company's FY results. Says results are almost exactly in line with forecasts and reasonably well within consensus range. The company remains well positioned to exploit 4G mobile testing and its travel business continues to generate profits and cash, the brokerage says. "We believe the group remains fundamentally undervalued given the strong positioning of the individual business." Reiterates buy rating. Shares flat at 35p. ([email protected]) 0834 GMT [Dow Jones] KBC Peel Hunt downgrades Interserve (IRV.LN) to hold from buy. Says it has concerns about UK government spending and pressure on its private sector facilities management business. Downgrades 2010 adjusted pretax profit to GBP68 million from GBP72.6 million, and the target to 200p from 250p. Shares +0.3% at 194.75p. ([email protected]) 0809 GMT [Dow Jones] KBC Peel Hunt upgrades Anite (AIE.LN) to buy from hold. Says there is evidence that 2H margins are beginning to scale quite markedly, meaning FY 2010 is likely to have been a trough year. Says transparency on the roll-out of 4G remains slight, but Anite is well positioned to capitalise on the turning of the technology cycle. Shares -0.7% at 35p. ([email protected]) 0702 GMT [Dow Jones] Balfour Beatty's (BBY.LN) update confirms trading in line with expectations, says KBC Peel Hunt. Says international diversification and migration towards professional services is mitigating pressures elsewhere in the portfolio. Says the outlook remains robust and the balance sheet is strong, with net cash of more than GBP400M. Shares +0.7% at 238p. ([email protected]) 0700 GMT [Dow Jones] Punch Taverns' (PUB.LN) trading update is in line with managements expectations, with trading picking up in May and June, says Shore Capital. Says that debt reduction has continued with net debt standing at GBP3.2B and brokerage expects this to have reduced to circa GBP3.1B by the August year-end, with net disposal proceeds of GBP263M (on target for GBP300M by year-end) at book value at an average Ebitda multiple of 15x. Adds "the group continues to maintain headroom within its covenants, with annual cash support of GBP45M required." Adds "We have a buy stance on Punch Tavern's highlighting the continued attractive debt reduction story on 8x Ebitda." Shares closed at 65p. ([email protected]) 0658 GMT [Dow Jones] Persimmon's (PSN.LN) update shows legal completions in the six months ended June 30 were around 16% ahead of the previous year, with average selling prices up by around 8%, says Shore Capital. Notes the majority of the company's land bank has planning for traditional two and three storey family housing for which, according to management, demand remains strongest. "While we remain cautious on the medium-term outlook for the sector, we believe Persimmon's relatively low gearing will provide some protection in the face of challenging market conditions." Keeos the stock at hold. Shares closed Monday at 348p. ([email protected]) 0653 GMT [Dow Jones] Royal Bank of Scotland initiates coverage on Hikma Pharmaceuticals (HIK.LN), with a hold rating and 750p target price. "Our optimistic forecasts reflect Hikma's strong position in MENA [Middle East and North Africa] and its strategy of globalizing the platform, which should allow it to compete effectively in the US and Europe," it says. However, sees execution risk associated with the successful implementation of the global platform strategy, and with structuring value-accretive deals in an increasingly competitive M&A environment in the MENA region. "We believe the current valuation fairly reflects our (and consensus) sales and earnings growth estimates. We await more clarity on execution risks before re-considering our stance," it adds. Shares closed at 688p. ([email protected]) 0653 GMT [Dow Jones] Punch Taverns's (PUB.LN) trading update is in line with expectations, says KBC Peel Hunt. However, in view of the challenging trading outlook for FY '11, the brokerage downgrades its FY '11E pretax profit forecast by 7% to GBP123M. Says this assumes no LFL growth or margin improvement. Notes net debt has been reduced by GBP0.2B since the beginning of the year to GBP3.2B. Keeps the stock at hold and puts 90p price target under review. Shares closed Monday at 65p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 06, 2010 07:42 ET (11:42 GMT)