UK MARKET TALK ROUNDUP: SHARES GAINING

2nd Jul 2010 12:03

Stocks on the rise in the UK today. Compiled by Dow Jones Newswires Markets Desk, [email protected] Contact us in London. +44-20-7842-9464 [email protected] 1103 GMT [Dow Jones] Evolution Securities upgrades Rio Tinto (RIO.LN) to buy from add and raises its target price to 3590p from 3525p following the latest iteration of the proposed mineral resources tax in Australia. The new proposals indicate a 740p/share reduction in the brokerage's discounted cashflow valuation - equivalent to about $21.8B. Evolution notes the mining tax rate has been reduced to 30% from 40% and is now only focused on the iron ore and coat sector, with other commodities excluded. Evolution adds that the proposal now represents a worst-case scenario, as implementation is dependent on a Labour win in the forthcoming election. Shares +1.3% at 2944p. ([email protected]) 1018 GMT [Dow Jones] Brit Insurance (BRE.LN) risks seeing Apollo Global Management walk away from buying Brit, says Collins Stewart analyst Ben Cohen. This comes after Brit rejected a GBP10.50-a-share indicative offer from Apollo. Cohen says an offer of GBP10.50 to GBP11 would be a fair basis for discussion. Says: "We are surprised and disappointed that Brit's board does not consider GBP10.50 a reasonable basis for discussions, especially in current market conditions. We think there is a real risk now that Apollo walks away." Adds that there is a lack of other bidders and Brit shares could fall to around the GBP8 level if Apollo walks away. Cuts rating to hold from buy, and price target to 1000p from 1075p. Brit shares +4.6% at 929p. ([email protected]) 1010 GMT [Dow Jones] Evolution Securities maintains Dana Petroleum PLC (DNX.LN) at neutral, but recommends selling if shares reach 1500p Friday, after the company confirmed it is in very early talks with South Korean national oil corporation, KNOC. Says it is far from certain the deal will go through and adds that the FT's reported takeout price of 1650p is above Evolution's core plus risked upside of 1577p. Dana's shares are trading up 19.4% at 1405p. ([email protected]) 0930 GMT [Dow Jones] Cannacord Research raises its price target for Cairn Energy (CNE.LN) to 398p from 368p after Cairn commenced drilling operations at its Sigguk Block, offshore Greenland. Cannacord says the operation in Greenland has the potential to transform the company's outlook. It adds that the target price is set at a premium of 15% to its base-case valuation to reflect more aggressive production from the company's Mangala interests and Cairn's status as a potential takeover target as well as its Greenland interests. Hold rating. Shares up 4.8% at 421p.([email protected]) 0923 GMT [Dow Jones] Canaccord Adams upgrades Micro Focus International (MCRO.LN) to buy from hold. The share price has dropped by 20% since Micro Focus announced the resignation of its chief financial officer. But the market is over-reacting, says Canaccord. It expects the shares to bounce back as the company releases solid results. It expects Micro Focus to attract a strong replacement for the CFO role. Cuts the share price to 510p from 540p. Shares +2.0% at 418.8p. ([email protected]) 0908 GMT [Dow Jones] Panmure Gordon trims Debenhams (DEB.LN) target to 58p from 68p following the company's results and conference call. Says this reflects lower medium to long-term profit expectations. "Longer-term, we have reined in our top-line growth expectations, in particular, partly due to expectations of higher public sector unemployment, which results in a lower DCF valuation." Says the valuation also takes into account a lower effective tax rate from '11 onwards due to corporation tax changes. Continues to prefer Next (NXT.LN), which it rates at buy. Has Debenhams at hold. Shares +1.9% at 56p. ([email protected]) 0851 GMT [Dow Jones] Investec Securities upgrades Rolls-Royce (RR.LN) to buy from hold, noting the recent market-led selloff that has seen the stock underperform and the brokerage's increasing conviction in the fundamental investment case. Says through a difficult downturn Rolls-Royce has proven its highly defensive business model. "With further positive earnings momentum in prospect, we view the current price as a good opportunity to invest in what we believe should be a core holding in the A&D sector." Has 630p price target on the stock. Shares +1.8% at 545p. ([email protected]) 0826 GMT [Dow Jones] Liberum cuts PartyGaming (PRTY.LN) target to 330p from 380p on recent negative news flow. Also says the 2Q trading statement could prompt further downgrades so the shares could remain weak in the short term. Says the company faces currency issues and ongoing competitive pressures from US-facing operators. Notes that there are few near-term catalysts for the company. However, maintains buy rating as potential 'game-changing' events, such as M&A and US regulation, have not disappeared. Shares +3% at 212p. ([email protected]) 0714 GMT [Dow Jones] Travis Perkins' (TPK.LN) trading update is positive, says Shore Capital, with the company indicating that following a slow start to the year it had seen a strong rebound in trading. Says group revenues for the six months ended June 30, 2010, were up by 4.7% with like-for-like sales up 3.4%. Adds there is further good news as Travis Perkins will resume dividend payments, the company expecting to declare an interim dividend of 5p/share on July 29. Shares +4.1% at 738p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 02, 2010 07:03 ET (11:03 GMT)