UK MARKET TALK ROUNDUP: BROKERS COMMENTS

15th Jul 2010 07:32

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] 0632 GMT [Dow Jones] A modest rally in GlaxoSmithKline's (GSK.LN) shares could follow after the FDA voted in favor of keeping Avandia on the US market, says Citigroup. The brokerage notes the withdrawal of Avandia could have reduced the group's '11 EPS by 3.3%, or 6.4% in the event of worldwide withdrawal. "The reaction we saw to the recent AstraZeneca (AZN.LN) Crestor victory suggests a stronger response could occur than purely driven by the earnings impact." Expects the FDA to rule within a couple of weeks, and thinks it will follow the panel recommendation by further restricting Avandia use. Has a buy rating, and 1375p price target. Shares closed Wednesday at 1182p. ([email protected]) 0624 GMT [Dow Jones] The debate on GlaxoSmithKline's (GSK.LN) Avandia medicine will likely continue, despite the FDA Advisory Committee voting in favor of keeping the drug on the U.S. market, says Jefferies. While the shares responded positively in the U.S. following the announcement, says there may be further talk as to how precisely the FDA will now act. But says the positive panel recommendation should be seen to cancel out the perceived increased litigation risk. Adds that a short-squeeze in the very near term may also help the shares to perform. Maintains buy rating and 1275p price target. Shares closed on Wednesday at 11812p. ([email protected]) 0620 GMT [Dow Jones] UBS cuts Hansen Transmissions (HSN.LN) price target to 75p from 100p to reflect ongoing challenges in the wind industry and the lack of positive near-term catalysts. Does not expect a significant short-term rebound for Hansen, and reckons direct-drive technology will pose an issue in the medium term. Cuts '11 EPS estimate to EUR0.01 from EUR0.03 and '12 EPS estimate to EUR0.04 from EUR0.09. Keeps the stock at neutral. Shares closed Wednesday at 70p. ([email protected]) 0617 GMT [Dow Jones] Citigroup downgrades Ashmore Group (ASHM.LN) to hold from buy and lowers the price target to 300p from 325p. With slowing fund flow momentum and performance fees driving a fall in FY '11E EPS, Citigroup finds it difficult to see Ashmore building on its premium rating. It thinks significant further upside for Ashmore looks unlikely. However Citigroup notes Ashmore's strong longer-term performance track record and says its well positioned to capture longer-term structural growth in assets under management, due to increasing institutional allocations to emerging markets. Shares Wednesday at 273.9p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 15, 2010 02:32 ET (06:32 GMT)