UK MARKET TALK ROUNDUP: SHARES LOSING

8th Jun 2010 11:36

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] 1036 GMT [Dow Jones] Tesco's (TSCO.LN) share price decline following the surprise resignation of its CEO, Terry Leahy, represents a decent buying opportunity, says S&P Equity Research. Reckons the shares have been oversold since the end of April, despite attractive fundamentals. Says: "We believe the company remains well placed to regain market share from imminent austerity measures, which are certain to impact consumer sentiment and spending, whilst also pushing its international presence." S&P adds that strategy changes are unlikely, given the internal appointment. Keeps at buy with 500p price target. Shares -2.4% at 397p. ([email protected]) 1017 GMT [Dow Jones] UBS cuts Northern Foods (NFDS.LN) target to 63p from 72p to reflect a higher-than-expected IAS 19 pension deficit. "But even so, [we] believe the current valuation assumes too pessimistic an appraisal of Northern Foods' ability to sustain the current return on its base assets." Says FY results were broadly in line with expectations, and anticipates further progress in FY '11. Keeps at buy. Shares -1.6% at 45p. ([email protected]) 0959 GMT [Dow Jones] S&P Equity Research cuts Kingfisher (KGF.LN) price target to 240p from 250p. S&P Equity cites revised forecasts and multiples, due to lower-than-expected sales and retail profit performance from French operations. Still, S&P Equity reckons the underlying story remains intact and it continues to like Kingfisher as a recovery story, with scalable international business. It looks for a stronger performance in France from 2Q'11. Buy rating. Shares -0.4% at 215p. ([email protected]) 0805 GMT [Dow Jones] Incoming Tesco chief executive Philip Clarke is well respected and key to the company's previous performance, Royal Bank of Scotland analysts say. "Clarke is very well respected and has been a key driver behind Tesco's international expansion and success," analyst Justin Scarborough says. "In the past ten years, Europe and Asia sales have gone from GBP1.8Bln to GBP17Bln with profits rising from GBP50M to over GBP900M." Scarborough also says the group's struggling U.S. business is an opportunity rather than a hindrance for the new management team. Clarke replaces Terry Leahy in March '11. Buy rating and 523p target price. Shares -1.6% at 400p. ([email protected]) 0801 GMT [Dow Jones] HSBC downgrades Punch Taverns (PUB.LN) to underweight from overweight. The brokerage says it has not seen signs of trade stabilizing in either the leased or managed divisions. Thinks the company's turnaround plans are sensible, but suspects the timing of its recovery could disappoint. Now thinks a discount to NAV is appropriate. Halves the target to 60p from 120p. In pub companies, it prefers Enterprise Inns (ETI.LN), rated at overweight. Punch -1% at 64p. ([email protected]) 0758 GMT [Dow Jones] BofA-Merrill Lynch downgrades Scottish & Southern Energy (SSE.LN) to neutral from buy and target to 1175p from 1350p. The company confirmed it will no longer have a material stake in the vehicle bidding in the auction for Electricite de France's (EDF.FR) UK electricity network assets. Says this dilutes what the brokerage viewed as a key catalyst for the shares in the short term. Thinks the investment story will now be dominated once more by the challenging energy market conditions, which should result in pedestrian earnings growth at best for the next two years. Shares -0.9% at 1064p. ([email protected]) 0737 GMT [Dow Jones] The retirement of Tesco's (TSCO.LN) chief executive is a surprise, but also increases visibility on the future of the company, Shore Capital analysts say. "The timing comes as a surprise. We were expecting him to go in the medium term, but it also removes the biggest question mark over Tesco," analyst Darren Shirley says. "We have got visibility in the handover. It should be a pretty seamless transition." Shirley adds the market would have no doubts about Sir Terry Leahy's successor, Philip Clarke. Says: "You don't build up a business the size of Tesco without a very capable team." Buy rating. Shares -1.5% at 401p. ([email protected]) 0713 GMT [Dow Jones] Goldman Sachs downgrades Bodycote (BOY.LN) to neutral from buy. Following a period of outperformance, the shares no longer have sector-leading relative upside to the price target, says GS. But it thinks the company should be a significant beneficiary of further improvements in industrial production and in the recovery in automotive and general industrial markets. GS sees significant earnings recovery through '10 and '11. It nudges the price target up to 290p from 274p. Shares -0.6% at 194.9p. ([email protected]) 0710 GMT [Dow Jones] Goldman Sachs downgrades Morgan Crucible (MGCR.LN) to neutral from buy. No longer sees sufficient sector-relative upside to retain the stock at buy. Still sees some uncertainty over the outlook for NP Aerospace post '10 given the potential for defense budget cuts as parts of increased fiscal austerity programs. But thinks the company should be able to deliver structurally higher margins over the next cycle as a result of its cost cutting action taken during the downturn. Nudges the target down to 250p from 254p. Shares -0.8% at 172p. ([email protected]) Contact us in London. +44-20-7842-9288 [email protected] (END) Dow Jones Newswires June 08, 2010 06:36 ET (10:36 GMT)