Wednesday tips round-up: Yell, Vectura, Computacenter...

13th Jul 2011 06:45

Is there something to Yell about at last for yet another business struggling to cope with the impact of the internet revolution? asks the Independent. To be sure, investors in the company have had a torrid time in recent years. All of a sudden, however, the shares are showing signs of life. What's driven the recent uptick is two deals: the announcement of a strategic alliance with Microsoft to provide advertising for small and medium businesses, together with the acquisition of privately owned Znode for about £12m. The market is getting excited - the shares are up by more than 50 per cent since the results presentation in May.On valuation grounds, Yell is cheap. This is a company that makes a profit but the shares value it at just one times forecast earnings for next year, although it still has a heavy burden of debt, equivalent to five times earnings before interest, tax, depreciation and amortisation. In the end, deciding whether or not to buy the stock depends on two clear questions: do you think Thursday's strategy day, combined with two interesting little deals heralds a turnaround? And do you back a newish management team to pull it off? The Independent labels Yell Group with a speculative buy rating.Regulatory approval of a new drug can set the share price of a firm on an upward course - as is happening with Vectura and its QVA149 lung drug. Vectura specialises in inhaled therapies and technologies for the treatment of respiratory diseases. QVA149, which is being developed in conjunction with Novartis, aims to provide a more effective treatment for chronic obstructive pulmonary disease, also known as "smokers cough". The World Health Organisation estimates this affects 80 million people worldwide, indicating the "blockbuster" potential for QVA149. We have in mind a price target of 120p, but longer term there is plenty of scope to exceed this target. However, the price can reverse just as quickly if the news flow deteriorates. Buy, recommends the Scotsman.Computacenter cheered analysts yesterday with what Panmure Gordon termed a "very pleasing" update. Profitability in the first half of the year will be "comfortably ahead of the same period last year", it said. The six months to the end of December saw revenue growth of 6 per cent, with the company showing strong growth in France and Germany. On the downside, the fly in the ointment was weak product revenues from clients in the financial services industry, which contributed to a slightly disappointing performance in the UK market. Offsetting that, the company's outlook was solid, as it remains on track to meet full-year hopes, despite being held back in the second half by an increase in its depreciation charge. Buy, recommends the Independent.Ryanair stormed out of Manchester nearly two years ago after failing to get a heavy discount on airport charges. The low-cost carrier announced its return yesterday and will offer seventeen routes from the airport, up from ten when it pulled out in 2009. The change of heart is not the result of a sudden capitulation by Manchester Airport Group: Ryanair has not been offered special rates on its landing charges. Rather, it is a recognition by Ryanair that it cannot ignore a big European city such as Manchester when sustained high oil prices are forcing up air fares. EasyJet has faced exactly the same problem and it is no surprise that Gatwick has replaced Luton as the airline's biggest base.But it costs more to operate from big airports and investors are growing concerned that the cost increases will not be matched by fare rises and that margins will remain squeezed for the foreseeable future. Analysts have been left questioning whether the low-cost airline model is fatally broken. Unless easyJet and Ryanair can come up with an alternative model, there is little for investors to get excited about, suggests the Times.Last summer, the Independent abandoned UK Coal, reasoning that the company was not in a position to capitalise on the upward trend in coal prices. The concern was down to what were fairly grim half-yearly results. Nearly one year on, yesterday's trading update was much better. Net debt, excluding restricted cash, stood at £207m at the end of June, down from £242m at the end of last year. Total first half production was 4.1 million tonnes, well ahead of the 2.7 million tonnes over the same period last year. The average realised selling price was also encouraging, according to the Independent, who suggests to buy.BCPlease note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.