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Broker Round-up Part 1 including Carillion, AstraZeneca, Moneysupermarket.com and Greene King

Last updated: 16:51 06 Jul 2012 BST, First published: 20:51 06 Jul 2012 BST

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Support services and construction company Carillion (LON:CLLN) has been hammered down to ‘sell’ from ‘neutral’ by Swiss bank UBS on low growth and weak margins.

The company told investors on Wednesday it was on track to meet full-year results in line with expectations, but warned that first half revenues would be lower than last year’s.

The broker is concerned about the firm’s growth prospects but says things could improve if it picks up material support services contracts in the second half.

“Elsewhere, unsustainable construction margins and low cash conversion, due to pension liability

and working capital outflows, will likely weigh on the stock,” added UBS analyst Benjamin Rosenberger, who also lowers his target price to 230 pence from 285 pence.

The share price tumbled more than five per cent to 254 pence.

Jefferies decided the time has come to drop pharma giant AstraZeneca (LON:AZN) back down to ‘hold’ after nine weeks at the top spot.

The broker now sees less value in the stock now that the share price has rebounded in the past month.

Analyst Jeffrey Holford said fears over a dividend cut to fund M&A activity have now been brushed off since the stock’s torrid run.

The company announced a slump in first quarter profits back in April, which saw CEO David Brennan walk out on the same day.

“As we expected, these fears have subsided as other commentators have begun to understand the importance of the dividend and share repurchase program following reassuring commentary from management,” said Holford.

Moneysupermarket.com (LON:MONY) is “well-placed” to extend its lead in the race between comparison websites, according to Westhouse Securities.

The broker initiates coverage with a ‘buy’ rating and 153 pence target price, adding that “very attractive earnings” and dividend growth are not priced into the stock as yet.

“We believe MONY is well-placed to consolidate its competitive advantage, reflecting a range of factors including the scale of its customer base, strong brand awareness, the breadth of its inventory, a clear marketing approach and a strategy centred on continual improvement,” it told clients.

Shares in AVEVA Group (LON:AVV) rose three per cent to 1,751 pence today after an upgrade to ‘buy’ from ‘hold’ by Berenberg, who said the engineering designer is “coming of age”.

The broker also hiked up its target price by almost 300 pence to 1,927 pence.

Its web-based information management business AVEVA NET is the main driver behind the upgrade. It is expected to break even this year after losing over £4 million last year.

“A major new partner for AVEVA NET should help to accelerate sales and increase the proportion of higher-margin licence revenue,” said the broker.

Elsewhere, Bank of America Merrill Lynch drank a toast to Greene King (LON:GNK), topping up its target price by 50 pence to 560 pence, while dropping Big Yellow Group (LON:BYG) down the ladder from ‘buy’ to ‘neutral’.

 

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