UK MARKET TALK ROUNDUP: BROKERS COMMENTS

1st Jul 2010 09:54

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] 0854 GMT [Dow Jones] Evolution Securities initiates coverage on Experian (EXPN.LN) with a buy rating and 767p target price, which implies 26% upside. Brokerage says its analysis correlates with Experian management's view of improving operating conditions that have led the company to guide for a pick-up in organic revenue growth. "Furthermore, our model suggests that, were end-2011 net debt levels maintained, Experian could buy 13% of its shares outstanding back by end-FY13, in addition to the 3% current buy-back program and 3% dividend yield," it adds. Shares -0.9% at 581p. ([email protected]) 0758 GMT [Dow Jones] Chloride Group (CHLD.LN) has managed to extract a lot of value for shareholders from Emerson Electric Co. (EMR) as ABB (ABB) announces it will not be raising its offer for the company. Says now that Emerson is the likely victor of the bidding war, Chloride has managed to prevent ABB from becoming a fourth force in the critical power markets. Says no other bidders are likely to come forward, especially at the price Emerson has been pushed into paying. Also, does not expect Chloride to push the price beyond the current 375p/share plus dividend offered. Keeps Chloride at hold, with 375p price target. Shares -4.3% at 369.5p. ([email protected]) 0733 GMT [Dow Jones] Greene King's (GNK.LN) FY results are in line with expectations, says Shore Capital, suggesting a robust start to the year. Adds current trading appears stronger than feared, with like-for-like sales up 6.0% in the core Greene King managed estate over the last eight weeks. Still, has concerns over trading for the next 12 months, and retains its hold stance. Shares -0.9% at 389p, outperforming a sharply lower general market. ([email protected]) 0719 GMT [Dow Jones] Debenhams (DEB.LN) third-quarter update disappoints on same-store sales, but strong gross margin performance and outlook, and refinancing efforts are a positive, says Seymour Pierce analyst Freddie George. "Like-for-like sales were weaker than what I expected, down 0.4% from a year ago, but there were positives that could help the shares, including on its accelerated debt refinancing." Keeps hold rating. Shares flat at 53p. ([email protected]) 0710 GMT [Dow Jones] John Wood Group's (WG.LN) trading statement shows that overall performance for the year-to-date is in line with expectations, says Arden. Says engineering remains a mixed bag, as expected, with positive sub-sea activity levels and a growing prospect list on the upstream side but ongoing pressure in the downstream and industrial areas. Says production facility levels are robust. Thinks Wood Group is an attractive investment, with its low-risk operating model, which looks quite lean following a period of cost rationalization. Says, "Wood Group offers a low-risk geared play into rising capital investment levels and a firming North American market." Keeps at buy. Shares -1.1% at 310p. ([email protected]) 0656 GMT [Dow Jones] Wellstream's (WSM.LN) trading update looks in line with consensus says Arden. Says the order book has improved from the May interim management statement. However, sees a note of caution about 2H '10, given the lack of visibility in the international markets and uncertainty surrounding the impact of the Gulf of Mexico situation. Continues to see better value elsewhere in the sector. Maintains neutral recommendation. Shares closed Wednesday at 503p. ([email protected]) 0653 GMT [Dow Jones] BT Group's (BT.A.LN) prices for Sky Sports 1 and 2 channels look "pretty compelling", Liberum Capital analyst Mark James says. BT Vision customers will be able to receive Sky Sports 1 and Sky Sports 2 channels, which are owned by British Sky Broadcasting Group (BSY.LN) and show the majority of the Premier League football matches, for GBP16.99 a month. Or if customers chose a bundle of broadband and calls, they will get sport for GBP11.99 a month. "I think it will be well received," says James, who has a buy rating on BT and 160p target price. Shares closed at 130p Wednesday. News Corp (NWS), which owns Dow Jones & Co, publisher of this newswire and The Wall Street Journal, holds about a 39% stake in BSkyB. ([email protected]) 0653 GMT [Dow Jones] BT's (BT.A.LN) announcement of its pricing for British Sky Broadcasting's (BSY.LN) Sky Sports 1 and 2 looks at first glance like a loss leader, says a trader. Says customers subscribing to the channels along with a 12-month broadband contract and BT Vision contract will pay GBP11.99 per calendar month, while BT pays BSkyB GBP17.14 per month and also subsidises the Vision boxes. But, notes that the company says this pricing is within the guidance set at its strategy day. Overall, thinks the announcement will be taken well. BT Group closed Wednesday at 130.1p. News Corp. (NWS), which owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal, holds about a 39% stake in BSkyB. ([email protected]) 0650 GMT [Dow Jones] Tate & Lyle's (TATE.LN) disposal of its sugar refining operations in the European Union to American Sugar Refining Inc for GBP211M in cash is a "sweet deal", says an analyst. Says this deal will help to reduce the company's debt, which stood at GBP814M at March 31. Analyst adds the company is looking to exit from the sugar market altogether, noting it is taking steps to sell its molasses and Vietnamese sugar businesses, its remaining sugars operations. The exit suggests the company is focusing on its specialty food ingredients business. Shares closed at 450p. ([email protected]) 0642 GMT [Dow Jones] Greene King's (GNK.LN) preliminary FY results are promising, with pretax profit in line with consensus expectations, says a trader. Says the company has had an encouraging start to the year, despite the cautious UK consumer. Says the pub group is well positioned to emerge from a weaker recessionary background and take advantage of future growth opportunities. Says it is looking strong versus peers. Expects the stock to start up by 5p. Shares closed Wednesday at 392p. ([email protected]) 0638 GMT [Dow Jones] Debenhams' (DEB.LN) interim results are slightly disappointing, says a trader. Says the statement is cautious, and notes the company remains wary over the strength of the retail market and consumer confidence levels. However, thinks the chief executive's comments with regards to the refinancing will be well received. Says the refinancing is progressing well, and Debenham's expects this to be completed within the next few weeks, well ahead of schedule. Trader expects the stock to open up by 1p. Shares closed on Wednesday at 53p. ([email protected]) 0637 GMT [Dow Jones] Credit Suisse cuts Eurasian Natural Resources (ENRC.LN) target to 1250p from 1400p. Brokerage remains concerned over near-term momentum and reduces 2010 and 2011 earnings forecast by 18% and 8% respectively. Says this is to reflect lower ferrochrome prices in 2H '10 and greater customer discounting than previously expected. Has a neutral rating. Brokerage continues to like the longer term investment case of the stock. "A strong balance sheet and expandable assets provide the growth potential that could reach 10% per annum," it adds. Shares closed at 861p Wednesday. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 01, 2010 04:54 ET (08:54 GMT)