UK MARKET TALK ROUNDUP: SHARES LOSING

19th Jul 2010 13:35

Stocks on the fall in the UK today. Compiled by Dow Jones Newswires Markets Desk, [email protected] Contact us in London. +44-20-7842-9464 [email protected] 1235 GMT [Dow Jones] Royal Bank of Scotland cuts Mothercare (MTC.LN) price target to 465p from 495p. "We believe group operating leverage and forecast risk resides in the UK business, where weakness over 1Q '11 has driven downgrades to our forecasts." Brokerage lowers its FY '11 pretax profit and EPS estimates to GBP42.7M and 35.4p from GBP46.2M and 38.3p. Expects a period of share price pressure ahead. Keeps the stock at sell. Shares -0.6% at 521p. ([email protected]) 1216 GMT [Dow Jones] Liability is the key issue for BP (BP.LN) says Credit Suisse, although the brokerage concedes that getting close to "zero oil" is an important psychological step. Says there are four main liability questions that remain unanswered. First, the amount of compensatory claims; secondly whether gross negligence will be proven; thirdly, if gross negligence is proven, whether punitive damages apply; and lastly, how liability will be shared amongst partners. Says its 515p target price offers 20%-26% potential upside. In its "optimist" case, says there is potential upside to 604p. In the "pessimist" case, BP's share price embeds gross negligence, 100% of costs and a total liability of $61Bln, pretax. Has outperform rating. BP is -3% at 395p. ([email protected]) 0856 GMT [Dow Jones] Numis Securities cuts UK Coal (UKC.LN) price target to 61p from 106p after reducing earnings forecasts following a first-half trading update. UK Coal says it expects to report a pretax loss of GBP94M for the first six months of the year due to production problems and charges associated with refinancing its debts. Numis' revised forecasts now point to a loss for 2011, and the broker adds UK Coal's debts are higher than anticipated. Keeps buy rating, however. "We still believe there is good value in the asset base but until this is crystallized we remain cautious," Numis says. Shares -5.9% at 36p ([email protected]). 0854 GMT [Dow Jones] Investec Securities cuts SThree (STHR.LN) to 375p from 390p following the company's results. Says: "Although the recovery is underway, we believe that our previous expectations were too ambitious and we are reducing our forecasts." Cuts '10 EPS estimate to 9.26p from 10.85p and '11 EPS estimate to 16.99p from 19.78p. Nevertheless, remains confident the group will generate strong recovery over the next two to three years and maintains buy recommendation. Shares -4.4% at 280p. ([email protected]) 0721 GMT [Dow Jones] Credit Suisse downgrades BHP Billiton (BLT.LN) to neutral from outperform, after lowering the company's earnings by 4% in FY '10, 16% in FY '11 and 12.5% in FY '12, due to changes to commodity price forecasts. Sees negative medium-term catalysts ahead. Maintains 2300p price target. Similarly, reduces Rio Tinto (RIO.LN) price target to 4500p from 5000p after reducing FY '10 earnings forecast by 11%, and by 19.5% in both FY '11 and FY '12, due to the brokerage's commodity prices revisions. BHP Billiton shares -0.5% at 1802p and Rio Tinto -0.1% at 3001p. ([email protected]) 0714 GMT [Dow Jones] Evolution Securities downgrades Associated British Foods (ABF.LN) to neutral from buy, but maintains its target price at 1090p. Its shares are up 30% since December relative to the FTSE 100, while earnings forecasts have been upgraded 13% and Evolution sees now as a good time to bank profits. It says the most recent IMS was more mixed than the four previous updates plus it sees limited upside to 2011 earnings, while Primark gross margin pressures are beginning to build. Evolution's 2011 EPS forecast is 74.9p vs consensus at 76.7p, reflecting the recent strength of sterling plus higher interest assumptions. Shares -0.4% at 1052p. ([email protected]) 0712 GMT [Dow Jones] Credit Suisse downgrades Anglo American (AAL.LN) to neutral from outperform, after the stock outperformed peers since August '09. CS cuts the price target to 3000p from 3600p and the stock is removed from the brokerage's focus list. CS says the restructuring/growth story is priced-in. Heading into the interim results on July 30, CS is concerned over potential negative catalysts, primarily from the Minas Rio project. It warns that further bad news on that issue would deal a blow to management, making delivery in other areas an imperative. Shares -0.9% at 2317p.([email protected]) 0708 GMT [Dow Jones] American International Group's (AIG) appointment of Mark Tucker, a former CEO of Prudential (PRU.LN), as the new head of its overseas life insurance unit, AIA Group Ltd., forms part of AIG's strategy to launch an IPO of the Asian unit, following its refusal to accept a reduced bid from Prudential a number of weeks back, notes Shore Capital. "The news is likely to generate considerable speculation that one of AIA's first moves as a quoted company will be to launch a bid for Prudential, with the aim of acquiring Pru's own Asian units and combine them with its own," says Shore. Keeps a buy rating on Pru. Prudential shares -0.8% at 518p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires July 19, 2010 08:35 ET (12:35 GMT)