UK MARKET TALK ROUNDUP: BROKERS COMMENTS

1st Jul 2010 11:55

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] 1055 GMT [Dow Jones] Ambrian upgrades Pennon Group (PNN.LN) to buy from hold and raises price target to 623p from 575p following the company's better-than-expected FY results. Says pretax profit of GBP183.8M was GBP17.5M ahead of Ambrian's forecast. Also notes the dividend was increased by 7.4% to 22.55p, in line with the company's policy of 3% per annum real increases. Ambrian adds there is 15% upside to the new target price. Shares -0.9% at 548p. ([email protected]) 1007 GMT [Dow Jones] UBS raises Arriva (ARI.LN) price target to 775p from 700p to reflect the price that Deutsche Bahn is making under the terms of its agreed takeover bid. Notes the deal is expected to close between August 24-August 26. Keeps the stock at neutral. Shares flat at 765p. ([email protected]) 0959 GMT [Dow Jones] The retail asset management business of Prudential's (PRU.LN) M&G Investments unit could raise GBP1.5B-to-GBP2B if listed, says Panmure Gordon analyst Barrie Cornes. Cornes says GBP2B-to-GBP2.5B could be raised if M&G as a whole is listed. This follows recent speculation that Prudential might consider floating M&G after failing to acquire AIA. Cornes notes M&G's retail business manages funds worth GBP70B, and says the recent float of Jupiter Fund Management (JUP.LN) "demonstrates appetite for such a move and it would enable the existing management of M&G to be suitably incentivised." Prudential declines to comment. Buy rating, 509p target. Shares -2.1% at 498p. ([email protected]) 0931 GMT [Dow Jones] Nomura raises Burberry (BRBY.LN) price target price to 818p from 732p. Sees further good news to come for the company and reckons it has scope to continue increasing control over operations, particularly in Japan, where the group could unlock significant hidden value. Notes Burberry shares have enjoyed one of the largest re-ratings in the luxury sector in the last year. Adds the stock deserves to trade on a higher multiple versus history because of its significantly higher operating margin potential. Still, thinks the stock is fairly valued and keeps at neutral. Shares -1% at 754p. ([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]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 01, 2010 06:55 ET (10:55 GMT)