UK MARKET TALK ROUNDUP: SHARES GAINING

15th Jun 2010 16:18

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] 1518 GMT [Dow Jones] Rio Tinto PLC's (RTP) $469M investment to develop the US-based Kennecott Eagle nickel and copper mine was expected and reaffirms the company's belief that long-term demand recovery is underway, says Rebecca O'Dwyer of Investec. Adds: "It's Rio Tinto's first major nickel development. After 18 months where they have been very tight with capital expenditure, this is a sign that they are perhaps more confident about the recovery." Investec has a buy rating and 4750p target price. Shares +0.8% at 3339p. ([email protected]) 1424 GMT [Dow Jones] NewsCorp's (NWS) planned acquisition of the 61% of BSkyB (BSY) it doesn't already own is likely to take a lot longer than the market anticipates, Olivetree Securities says, pointing out the special nature of U.K. media deals is such that the deal could require more than the standard antitrust clearances. "We think this deal will take in excess of 12 months to close, indeed there is scope for it taking as long as 18 months," media sector strategist Tim Daniels says. "Shareholders need to understand that the path to receiving cash for their shares is a long and complicated one." Shares + 17% at 701p ([email protected]) 1154 GMT [Dow Jones] Goldman Sachs nudges down Severn Trent (SVT.LN) price target to 1313p from 1338p, mainly reflecting higher net debt than the brokerage had previously forecast. Says this is partly offset by a positive mark-to-market move on debt. Meanwhile, says the FY results released in May were ahead of expectations, due to a combination of better cost control and lower interest charges. Keeps at neutral. Shares +0.3% at 1288p. ([email protected]) 1145 GMT [Dow Jones] The FTSE 100 is finding it difficult to maintain much in the way of gains above its 38.2% Fibonacci retracement level at 5255, says Michael Hewson, analyst at CMC Markets. "If it does, an even bigger obstacle lies in its way at the 200-day moving average at 5325," he adds. Says key resistance level could well dictate the next move for the index, noting that a break and close above the key level would be a significant boost to risk appetite. "However, if these levels hold then we could well see a drift back towards the lows seen in recent weeks," he adds. FTSE 100 now +0.4% at 5222.69. ([email protected]) 1117 GMT [Dow Jones] Bank of America Merrill Lynch raises Weir Group (WEIR.LN) price target to 1340p from 1220p following the company's stronger than expected trading update. Says aftermarket orders have been strong across the business and original equipment orders have begun to return. The brokerage also notes Weir's acquisition of Malaysia-based Linatex and says the deal looks like a good fit. Raises '10 EPS forecast to 87.74p from 76.35p and '11 EPS forecast to 101.51p from 85.58p. Reckons the group's end market exposure and geographic sales split should support earnings growth above the sector. Keeps at buy. Shares +0.7% at 1073p. ([email protected]) 1112 GMT [Dow Jones] Societe Generale increases InterContinental Hotels Group (IHG.LN) price target to 1060p from 880p. Nudges up its revenues per available room (RevPAR) assumptions following Starwood Hotels' (HOT)- rated hold -comments and Marriott International's (MAR)- rated buy - bullish guidance on the U.S. market last week. SocGen now anticipates 2% RevPAR growth in the U.S. in '10, versus a forecast of a 1% decline previously. Also sees a far more favorable USD/GBP exchange rate. But says InterContinental still trades at a significant premium to its European peers, which more than prices in the short-term growth prospects. Keeps at sell. Shares +3.3% at 1236p. ([email protected]) 1058 GMT [Dow Jones] BP (BP.LN) shares dip and then swiftly recover, following a downgrade of its long-term issuer default rating by Fitch Ratings. The news is largely shrugged off by the market and at 1058 GMT, the stock is +1% at 359p. A trader says the Fitch move is no surprise. Notes that the share price is hovering underneath the 360p-mark as the President prepares to give a TV address on the oil saga later Tuesday while U.S. Congress suggests $20Bln needs to be set aside to pay for compensation. ([email protected]) 0952 GMT [Dow Jones] News Corp's (NWS) bid for British Sky Broadcasting (BSY.LN) makes sense says Citigroup. Says most of the new initiatives planned by BSkyB can be facilitated with existing technology and at marginal costs, so it stands to reason that News Corp would consider buying the free float now that investment is largely complete. Adds that weak sterling, uncertainty over PayTV and a potentially more accommodative UK government also make a bid attractive at this stage. The difficulty now is whether they can agree on a price, the brokerage says. Citigroup has BSkyB at buy, 700p price target. Shares +18.3% at 711p. News Corp, which owns Dow Jones & Co., publisher of this newswire, has a 39.1% stake in BSkyB. ([email protected]) 0941 GMT [Dow Jones] British Sky Broadcasting (BSY.LN) shareholders could accept a bid in the range of 750p-800p from News Corp (NWS), says Investec Securities. This comes after BskyB says a full takeover offer received from News Corp of 700p per share undervalues the firm. Investec adds that the bid makes sense, "given the weak pound versus the dollar, News Corp direct European pay TV investments elsewhere...and James Murdoch's intimate knowledge of the business." Brokerage raises target price to 700p from 615p and keeps the stock at hold. Shares +18.4% at 711p. News Corp, which owns Dow Jones & Co., the publisher of this newswire, has a stake of about 39% in BSkyB. ([email protected]) 0846 GMT [Dow Jones] Tesco's (TSCO.LN) 1Q trading update is in line with expectations, and the UK performance likely marks the low point of the year, says Bernstein. "We expect that recent increases in food commodity costs should drive an acceleration in food inflation throughout the remainder of '10, and as such expect 1Q represents the low-point of grocers' sales performance in the year." Also expects international performance to accelerate through the year. Adds Tesco trades broadly in line with its UK peers despite having superior long-term growth prospects. Rates the stock at outperform, with 500p price target. Shares +0.8% at 395p. ([email protected]) 0823 GMT [Dow Jones] Numis increases its target price on BSkyB (BSY.LN) to 800p from 703p following News Corp.'s (NWS) approach to buy the 61% stake it doesn't own in the UK pay TV group. Numis media analysts Lorna Tilbian, Paul Richards and Dominic Buch expect a "lengthy regulatory process," but don't view regulatory issues as "insurmountable" and expect a deal will be concluded within the 700p-800p (a share) range. "We believe that News Corp is in robust financial health while the BSkyB valuation does not fully reflect its medium-term growth potential. Combined with the current weakness of sterling, we can certainly see the attractions of a bid," they add. BSkyB shares +19% at 717p. News Corp., which owns Dow Jones & Co. the publisher of this newswire, has a 39.1% stake in BSkyB. ([email protected]) 0821 GMT [Dow Jones] Citigroup raises Weir Group (WEIR.LN) price target to 1280p from 1230p following the company's stronger-than-expected trading update. Says 1H '10 guidance is around GBP26M ahead of previous expectations. Also notes the company's announcement of a GBP138M acquisition of Malaysian-based Linatex, which Weir believes will be around 5% EPS accretive from '11. Citi raises its '10 EPS estimate to 89p from 75p, and its '11 EPS estimate to 94.9p from 81.9p. Shares +0.3% at 1069p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 15, 2010 11:18 ET (15:18 GMT)