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Broker Spotlight brings some of the more intriguing and topical analyst coverage to centre-stage. The daily column aims to illuminate thoughts and opinions behind the big stories. London is one of the financial capitals of world. The influential and closely followed views of its analysts regularly move markets and split opinion. The Broker Spotlight column arms Proactive readers with the added insight from the often colourful thoughts and headline-grabbing valuations from the City’s analyst community.
Broker Roundup Part 1 including William Hill, Ladbrokes, Betfair, easyJet, Croda and GKN
June 26 2012, 11:38amBroker JP Morgan backed the bookies this morning as it upgraded William Hill (LON:WMH) and Ladbrokes (LON:LAD).
“We upgrade William Hill to ‘overweight’ from ‘neutral’ based primarily on the growth opportunities for its online division,” said analyst Matthew Webb.
JPM also increased the price target to 330 pence per share from 228 pence per share.
William Hill pulled ahead of its closest peer Ladbrokes, as the broker said its online division had been much more successful than Ladbrokes.
Webb added that JPM was upgrading Ladbrokes to ‘neutral’ from ‘underweight’ due to Ladbrokes’ exposure in the UK market, which has seen improved industry demographics in the last decade. The Ladbrokes price target increased to 170 pence per share from 114 pence per share.
Meanwhile the broker reduced the Betfair (LON:BET) price target to 800 pence from 1,039 pence as it sees risk from the upcoming period of change, such as the new CEO starting in August and the expansion of the business model to include online bookmaking activities.
EasyJet (LON:EZJ) was preferred in the line-up of its peers covered by Morgan Staley today as it benefits from lower fuel prices, as well as increased exposure in France and the closure of its Madrid base.
Analyst Penelope Butcher said the airline is the best performer, on a returns basis, in its coverage, which includes Lufthansa (ETR:LHA), Ryanair (LON:RYA) and IAG (LON:IAG).
The broker increased the easyJet price target by 6.7 per cent to 640 pence as well as increasing pre-tax profit estimates for 2012 and 2013.
Meanwhile chemicals company Croda (LON:CRDA) was described by JPM analyst Martin Evans as showing “resilience” in the last downturn, adding that this attractive quality is unlikely to wane.
“The second quarter should have traded well, and we upgrade forecasts and recommendation to ‘overweight’ from ‘neural’, though we acknowledge that the stock is not necessarily cheap at current levels.”
The broker’s pre-tax profits forecast increased to £263 million from £257 million for 2012 and the price target was upped to 2600 pence from 2220 pence.
Broker Credit Suisse reduced engineering giant GKN’s (LON:GKN) earnings per share forecasts in a note out this morning by 4 per cent for 2012 and five per cent for 2013 and 2014 but maintained its ‘buy’ stance.
“We remain buyers of GKN shares - the stock is both good value on a stand-alone basis while a possible deal for Volvo Aero would improve group visibility, and increase valuation attractions with any concerns over the acquisition in our view fully discounted in the current price,” said analyst J.Hurn.
