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Risk Warning
10/08/2011
Brokers were quick off the mark to confirm their buy ratings for Micro Focus, after the legacy software specialist announced on Wednesday that it is trading ahead of expectations: Panmure Gordon reiterated a buy and 416p target price; Merchant Securities also recommended to buy with a target price of 329p; Singer Capital Markets kept its buy rating and 415p target price; while Peel Hunt upgraded Micro Focus from hold to buy and left its target price at 340p.
Prime Markets suggests to buy travel operator TUI Travel following its third quarter statement released on Wednesday, saying that the recent sell-off has been overdone. “At the current 171p, and with the CEO confident of meeting full year expectations, Prime rates TUI shares a buy on the dips to return to the current 20-day moving average at 184p.”
UBS downgraded precision tool maker Renishaw from buy to neutral, saying that opportunities for structural growth may take a while to show through. “Renishaw carries little visibility and its products require customers to have confidence in the future given the relatively high ticket prices & orientation to investment.” The target price is slashed from 2,000p to 1,350p.
Buy online betting firm Sportingbet, recommends Peel Hunt, who notes that the full year remains on target. “We believe a deal with Ladbrokes would be attractive for both parties and be struck at a price substantially above the current level. Even if Ladbrokes doesn’t come through with a bid we believe that the group is now better placed to extract the inherent value contained within the business.” The target price is left at 61p.
Despite Standard Life showing the first signs that its strategy is working, Nomura kept its reduce rating and 250p target price on the stock, saying that the stock’s valuation is still demanding. “[However,] in spite of clearly improving performance, we think the stock’s relative valuation still appears demanding on a 2011E IFRS P/E of 13x versus the sector on 9x on our estimates, and we see better value elsewhere,” they said.
UBS upgraded defence firm BAE Systems from neutral to buy following the group’s interim results on 28 July. “Upgrading to a buy […] as we believe downside risk is minimised by reaching trough profit valuations, the high dividend yield, share buy-back and [price-to-earnings ratio] yield.” The target price, however, is scaled back from 330p to 300p due to the increase in estimated pension underfunding since the first half.
Peel Hunt kept its sell rating on support services and construction group Interserve, despite interim profits coming in ahead of expectations. The target price stays at 250p. “We maintain 2011 estimates for now but markets look fragile and we are wary of margin pressures going forward.”
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.