UK MARKET TALK ROUNDUP: BROKERS COMMENTS

10th Jun 2010 08:16

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] 0716 GMT [Dow Jones] Results for Argos in Home Retail Group's (HOME.LN) 1Q trading statement are disappointing and a lot worse than expected says Seymour Pierce. The figures are impacted by weak game and TV sales. Seymour says the Argos results are worrying given that competition is intensifying, particularly from the food retailers. In contrast, Homebase figures are a little better-than-expected. Still, the brokerage says there are more compelling investment opportunities in the sector. It reiterates a sell rating because of the potential for downgrades to earnings forecasts although it maintains there is now limited downside to the shares. Shares -4.7% at 227p.([email protected]) 0653 GMT [Dow Jones] The acquisition by Centrica's (CNA.LN)North American subsidiary Direct Energy of Clockwork Home Services should be positive for the Centrica share price, says an analyst. Says the deal shows that Centrica is following the same successful strategy it has displayed in the UK. Says the acquisition of Clockwork will make Direct Energy a market leader in the North American home energy services market. Centrica shares closed Wednesday at 277.9p. ([email protected]) 0652 GMT [Dow Jones] Royal Bank of Scotland initiates coverage of Paragon Group (PAG.LN) at buy with a 200p price target. RBS says the 1H '10 results underline the quality of the loan portfolio. It thinks the group looks in a strong position financially and the loan portfolio continues to perform well, with arrears rates well below the market average. A return to lending in any material way looks to be much closer to becoming a reality, says RBS, adding that management has given the strongest message yet that it is close to accessing a warehouse facility, which would in turn allow Paragon to tap the securitization markets. Shares closed Wednesday at 130.8p.([email protected]) 0650 GMT [Dow Jones] Home Retail's (HOME.LN) 1Q results are in line with forecasts overall, but sales at Argos are disappointing, says Shore Capital analyst Kate Calvert. Says sales at Homebase are a little better than forecasts and indicated the group has taken market share. However, says the group's outlook, although in line with consensus, will disappoint investors. Buy rating. Shares closed Wednesday at 238p. ([email protected]) 0649 GMT [Dow Jones] Halfords' (HFD.LN) FY '10 results are modestly ahead of expectations says Execution Noble. Notes management's target of delivering average annual EPS growth of 15% going forward. Says Halfords remains one of the best placed retailers under the brokerage's coverage showing continued earnings growth both organic and through acquisition. Says the balance sheet is strong. Says the shares have had a strong run but thinks a calendar '11E P/E of just 10.4x does not look expensive. Keeps at buy. Shares closed Wednesday at 500p. ([email protected]) 0642 GMT [Dow Jones] Premier Farnell'S (PFL.LN) 1Q results are well ahead of expectations, say KBC Peel Hunt. Says the beat at pretax profit and EPS level is due to strong sales growth in all regions, combined with the impact of operational gearing from its recent restructuring. Thinks Premier Farnell's US exposure will work in its favor while the euro zone's economic conditions look uncertain. The name is KBC's preferred play in the sub-sector. Has a buy recommendation, with 250p target price. Shares closed Wednesday at 219.6p. ([email protected]) 0634 GMT [Dow Jones] UBS raises Carpetright (CPR.LN) to neutral from sell, believing that the recent de-rating leaves the stock more fairly valued, both on absolute valuation and relative to the sector. Still, "we remain cautious regarding the near term outlook for Carpetright, with consumer spending likely to remain tight, but think that this is balanced by good prospects in the longer term when the market recovers," adds UBS. As a result, it lowers Carpetright target price to 680p from 750p. Shares closed at 667p. ([email protected]) 0627 GMT [Dow Jones] Home Retail's (HOME.LN) first-quarter results are in-line with forecasts overall, but sales at Argos are disappointing, Seymour Pierce analyst Freddie George says. He says sales at Homebase are a little better than forecasts. Shares closed Wednesday at 238p. ([email protected]) 0620 GMT [Dow Jones] Goldman Sachs upgrades Cable & Wireless Communications (CWC.LN) to neutral from buy, and lifts its target price to 71p from 58p. Says the FY '10 results showed unappealing organic growth trends but were more than offset by a material forex benefit. Doesn't expect the continued weakness in CWC's key markets to subside in the near term, but notes since the stock was added to the Sell List on March 29 it has risen 1.9% versus the drop of around 15% in the FTSE World Europe index. Shares closed at ([email protected]) 0607 GMT [Dow Jones] JPMorgan Cazenove initiates coverage of Essar Energy (ESSR.LN) at overweight with a 525p price target. Sees two key catalysts ahead. Thinks the company will benefit significantly from pump price deregulation in India as the company is the largest private fuel retailer in the region. Also notes that the management is confident the Ratna production sharing contract will be finalized by the end of June or early July. Also, thinks the valuation is attractive. Shares closed Wednesday at 450p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 10, 2010 03:16 ET (07:16 GMT)