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Risk Warning
23/06/2011
Matrix upgraded tobacco giant Imperial Tobacco to a ‘buy’ rating, from ‘add’, but lowers the target price to 2,290p. “Spain’s first serious cigarette-price disruption since January 2006 created a headache for both manufacturers and government. However, a prolonged skirmish and contagion to other markets seem unlikely,” said analyst Chris Wickham, noting that investors should now take advantage of a “useful entry point”.
Prime Markets said that Aviva’s sale of RAC “makes perfect sense”, and keeps its ‘buy’ recommendation. “The large cash injection will allow Aviva to focus on its core businesses, and further adds to the group's IGD surplus (Insurance Group Directive), i.e. its regulatory capital requirements as laid down by the FSA.” Prime Markets believes that the stock will retest the upper resistance level of 442p (TP) in the next 7-10 days.
Nomura made slight downward revisions to its estimates for electrical retailer Kesa Electricals, following the group’s full-year results which showed that weak trading at its UK chain Comet held back sales, prompting speculation of a sale. While the Darty business and cash generation remain strong, the broker keeps a ‘neutral’ rating and 157p TP.
While Singer expects revenue in the current year for Micro Focus to be slightly lower than its expectations, the broker kept its ‘buy’ rating and 415p target price. "There is still a lot to deliver to turnaround the business operationally and put it back on a growth track. This is counterbalanced by the bid offers. We see no reason to change our 415p TP," Singer said.
Peel Hunt also expects a weaker current-year performance than previously expected at Micro Focus, and revises its numbers down by 3% on lower sales. The broker has kept its ‘hold’ rating “in the absence of a bid”. A TP of 340p is retained.
Peel Hunt upgraded Imagination Technologies from a ‘sell’ rating to ‘hold’ and raised the TP from 390p to 413p, saying that the downside risks look limited. “We see the current share price as reflecting [Imagination’s] lower-end market share forecasts and have moved to a ‘hold’,” said analyst Alex Jarvis.
UBS raised its target price for design and engineering consultancy WS Atkins from 725p to 770p given the year-end pension adjustments, but the broker stays cautious with a ‘neutral’ rating. Results for year ended 31 March were broadly in-line with consensus on an underlying basis, the broker notes. However, the UK outlook continues to provide some concern as it accounts for “60% of revenues and conditions are difficult.”
Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily a guide to future performance. Trading in these markets is generally considered to be suitable only for the more experienced investor as it carries a high degree of risk. An investor may not receive back the amount of their original investment and in certain circumstances may be liable for a sum that is greater than their original investment. If in any doubt, please seek independent financial advice.