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BROKERS and analysts this week comment on the following companies: Abbey National, Airtours, Anglo American, ARC International, ARM, Ashtead, AstraZeneca, Balfour Beatty, BAE Systems, Berkeley, BP, Capita, Carlton Communications, Centrica, CMG, Compass, Delta, Emap, Eurotunnel, First Choice, FirstGroup, Go-Ahead Group, Granada, Hilton, Innogy, Kingfisher, Logica, London Bridge Software, Misys, National Express, Northern Rock, Northgate, Parthus, Reckitt Benckiser, Reed, Safeway, Selfridge, Serco, Shell, Stagecoach, Stanley Leisure, Tesco, Vodafone, Volex, Wm Morrison
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20 July
UBS Warburg has cut its price target on chip designer ARM Holdings to 260p from 440p and on Irish peer Parthus Technologies to 45p from 120p. It repeated a 'hold' rating on both stocks. Warburg also repeated a 'hold' rating and 55p price target on ARC International.
Credit Suisse First Boston has cut Eurotunnel to 'hold' from 'buy', citing the economic slowdown in Europe. Schroder Salomon Smith Barney has raised its share price target on mortgage bank Northern Rock to 640p from 600p and kept its rating as 'outperform'. Commerzbank has downgraded Northern Rock to 'hold' from 'buy'. 'It continues to be a safe haven for investors in troubled times, but without much absolute upside,' Commerzbank said.
ABN Amro has raised its rating on electricity generator Innogy Holdings to 'add' from 'hold', giving a price target of 248p for the stock. It cited a 'a successful sale of its Yorkshire distribution, degearing the stretched balance sheet, a Regenesys IPO and its own attractions as a UK takeover play.' Regenesys is Innogy's electricity storage subsidiary
Schroder Salomon Smith Barney has raised department store group Selfridges 'outperform' from 'neutral' and its share price target to 390p from 380p, citing growth at the firm's Manchester store and new store openings. SSSB has cut business support services company Serco to 'outperform' from 'buy', setting a 480p price target. 'The September interims could provide a trigger for better sentiment if Serco adequately addresses investors' refinancing concerns,' it said.
19 July
Commerzbank has raised its recommendations on oil companies BP and Royal Dutch/Shell to 'hold' from 'reduce'. 'The equity market has now absorbed BP's dull second quarter trading statement and the more recent weakness in oil prices, refining margins and US natural gas prices,' Commerzbank said. Royal Dutch/Shell was likely to resume share repurchases after its second-quarter results are announced on 2 August while BP could resume its buy-backs after its results on 7 August.
UBS Warburg has lowered electronics firm Volex to 'hold' from 'buy', cutting its price target to 550p from 850p. Warburg has raised builder and property developer Berkeley to 'strong buy' from 'buy', repeating a 900p price target on the stock.
ABN Amro has cut its recommendation on software company Misys to 'reduce' from 'add'. UBS Warburg has cut Misys to 'hold' from 'buy', dropping its price target to 400p from 650p. Schroder Salomon Smith Barney has dropped its target for Vodafone to 180p from 220p.
18 July
ABN Amro has cut its ratings on hotels and gaming group Hilton to 'hold' from 'add' and on gaming group Stanley Leisure to 'hold' from 'buy'. It said a Government review of gaming laws was encouraging but 'the proposals which would most materially benefit the gaming industry will require primary legislation, which will result in many of the proposals not becoming law for up to five years.'
Credit Suisse First Boston has reduced transport firms FirstGroup, Go-Ahead Group, National Express and Stagecoach Holdings to 'hold' from 'buy', citing the shares' recent gains and the Government's decision to focus on two-year extensions rather than new 20-year franchises to replace short-term rail franchises that expire in 2004. 'This removes one of the main catalysts for further positive share-price performance,' it said.
Merrill Lynch has reduced its intermediate term recommendation in engineering group Delta to 'neutral' from 'buy'. It said the company's debt is likely to be higher than expected, and noted weak markets.
Morgan Stanley has restarted its coverage of Anglo-Dutch publisher Reed with a 'neutral' rating. 'We believe Reed's advertising exposure (around 20% of revenues) will hurt the company in 2001,' it said. 'We find it difficult to see much upside in the shares.' Goldman Sachs has cut its rating on media group Emap to 'market perform' from 'market outperform', saying it saw no obvious catalysts to share price outperformance.
Credit Suisse First Boston has raised its price target on vehicle hire firm Northgate to 515p from 496p, repeating a 'buy' rating on the stock. 'Northgate is the market leader in the growing UK light commercial vehicle rental sector and remains on track to double the size of its business between 1999 and 2004,' CSFB said.
Schroder Salomon Smith Barney has cut industrial equipment hire firm Ashtead Holdings to 'outperform' from 'buy' and its price target to 130p from 170p. 'The business has high operational and financial gearing, which in today's markets are unattractive traits,' it said. UBS Warburg has cut online bank Egg to 'hold' from 'buy', while keeping a price target of 160p on the stock.
17 July
Deutsche Bank has dropped its rating on defence industries company BAE Systems to 'market perform' from 'buy' following the shares' strong outperformance in recent weeks.
Merrill Lynch has cut media firm Carlton Communications to 'intermediate term reduce' from 'neutral'. It has reduced its revenue predictions for the firm amid growing evidence of advertiser cutbacks. 'We believe the shares will resume their under-performance...with no sight of any upturn until around April 2002, and with the concern surrounding the churn in ITV Digital and the programming costs of ITV Sport,' it added.
Merrill has halved its 2002 pretax profit forecast for media group Granada to £32.5m, after further downgrading its forecasts for ITV advertising revenues. The 2003 forecast falls to £152m from £173.5m. It kept the stock at short-term 'neutral' and long term 'accumulate.'
ING Charterhouse has cut its rating on supermarket group Tesco to 'hold' from 'buy', dropping its price target to 275p from 300p. 'We like the management, the strategy and the operations and we think the long-term outlook is fine, but for now it's a case of pausing for breath on valuation grounds,' ING said.
Credit Suisse First Boston has raised engineering firm Delta to 'buy' from 'hold' with a share price target target of 155p, citing its strong national and global market positions. CSFB has started coverage of gas and services company Centrica with a 'buy' recommendation and target price of 238p. 'Centrica has carved out a unique niche within the pan-European utilities sector,' it added.
Schroder Salomon Smith Barney has raised its price target on engineering and construction group Balfour Beatty to 210p from 180p, rating the share 'outperform'. It predicted a 28% hike in earnings this year. 'Balfour Beatty is set to deliver the best earnings growth within the contractors,' SSSB added.
Banc of America Securities has cut its price targets on three software firms. Logica falls to 760p from 940p, CMG to 230p from 320p, and Capita to 600p from 658p. It blamed current market conditions, and repeated a 'market perform' rating on Logica, an 'underperform' on CMG and a 'buy' on Capita.
Goldman Sachs has downgraded mobile phone retailer Carphone Warehouse and supermarkets Safeway and Wm Morrison to 'market performer' from 'market outperformer'. It reckons discount retailer Matalan and retail group Kingfisher are better bets. 'The UK food retailers have seen the strongest performance across the sector, but we do not believe that the currently strong pricing environment, which is helping to flatter like-for-like sales, is sustainable,' Goldman added. The Safeway price target falls to 380p from 395p, but Morrison's target was held at 210p.
Morgan Stanley has raised its price target on Anglo-Dutch consumer products giant Reckitt Benckiser to 1100p from 1050p and repeated an 'outperform' rating on the stock. UBS Warburg has cut its price target for Vodafone to 220p from 280p, as part of a general downgrade of European mobile network operators.
16 July
JP Morgan has started coverage of mining company Anglo American with a long-term 'buy' recommendation and a target price of 1247p. 'Successes on corporate activity, integrating acquisitions and cost control are the major catalysts for Anglo's rerating,' it said.
Merrill Lynch has raised its recommendation and share price targets on Airtours and First Choice Holidays. Airtours was lifted from 'neutral' to 'accumulate' with a share price target of 275p, while First Choice Holidays was raised to 'buy' from 'accumulate' with a target price of 165p.
Commerzbank has cut drug maker AstraZeneca to 'sell' from 'hold', dropping its share price target to 2800p from 3100p. It said profits were at risk from product delays and 'setbacks for both AstraZeneca and the sector as a whole.'
Goldman Sachs has raised mortgage bank Abbey National to its 'recommended list' from 'market outperformer'. The investment bank reckons the stock will outperform its peers in the second half of this year. It set a target price of 1320p for this year and 1420p for 2002.
Goldman has dropped food services group Compass to 'market performer' from 'market outperformer', saying the stock had exceeded its 550p target. 'We remain attracted to the combination of a strong management team and a recession-resilient business model, but now feel the stock is fully valued,' Goldman said.
UBS Warburg has raised London Bridge Software to 'hold' from 'reduce', citing the stock's 60% slide this year. It has cut its price target to 120p from 180p.
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