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Broker round-up Part 2: Norcon, Ovoca Gold, Orosur Mining, Forte Energy and Avocet Mining

Last updated: 12:51 13 Apr 2012 BST, First published: 16:51 13 Apr 2012 BST

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Next week is important for the retail sector with some heavyweights reporting trading updates.

Marks and Spencer (LON:MKS) is set to report a slight increase in fourth quarter like-for-like (LFL) sales compared to the previous three months, according to Swiss banking firm UBS.

Food sales will be 2 per cent ahead, but sales of general merchandise will be flat it suggests.

“The main reason why the fourth quarter should be better than the third quarter is that the drag from electricals withdrawal should be lower,” it said.

Homewares sales fell 13.3 per cent in the three months to December after the company stopped selling electrical products.

UBS retains its ‘buy’ rating on the stock with a price target of 410 pence.

Meanwhile, the broker has raised luxury clothing brand Burberry’s (LON:BRBY) price target to 1,580 pence from 1,370 pence ahead of its fourth quarter results next week.

It predicts a slight dip in total sales growth to 16.5 per cent against third quarter growth of 23.7 per cent.

The brand has become a "must have" for Chinese and Japanese consumers, both in their domestic markets and in Europe as tourists.

In retail, UBS forecasts LFL sales growth of over 12 per cent, marginally down from the third quarter.

The broker has also nudged up sales estimates for the current full year by 4 per cent to £2,124 million on the back of new retail space and higher LFL retail sales. UBS retained its ‘neutral’ rating on the shares.

Credit Suisse has placed a price target of 2,350 pence on power rental company Aggreko (LON:AGK), while the stock rating remains ‘neutral’.

UK-based Aggreko, which rents out power and temperature control systems such as generators, may see slowing growth in the first quarter of this year, according to the Swiss banking firm.

Seymour Pierce says the revised bid for Lloyds Banking's (LON:LLOY) Verde banches from NBNK gives shareholders the opportunity of receiving cash directly and/or receiving shares.

The Verde business has 632 branches serving around 5.5 million customers with an estimated value of £1-1.5 billion.

Lloyds had named the Co-op as its preferred bidder but its offer is reportedly being bogged down by financial and regulatory issues.

Seymour Pierce maintains a ‘hold’ recommendation on Lloyds and has a target price of 35 pence against the current market price of 31 pence.

Finally, US broker JP Morgan has not changed its estimates for Barclays (LON:BARC) ahead of first quarter results despite an encouraging start to the year. Barclays remains the broker’s top pick for value among UK banks with an ‘overweight’ rating.

Today, global communications network specialist Norcon (LON:NCON) reported final year results in line with expectations.

Norcon provides project management and outsourcing services for operators of telecommunications networks and last year expanded its geographical reach, adding clients in Oman, Thailand, Malaysia, Scandinavia, Russia and Ukraine.

Broker finnCap believes the company’s strong balance sheet and strategic expansion programme for 2013 should lead to growth.

FinnCap has a price target of 35 pence, while the market price soared 13.5 per cent today to 29.50 pence.

Elsewhere, Moscow-based gold company Ovoca Gold (LON:OVG) has appointed a non-executive director.

Kirill Andreyevich Golovanov, who currently works as the company secretary and is head of the Russian office, has played a major role in the development and sale of the Goltsovoye silver deposit.

Broker Fairfax says his extensive experience in mining and corporate law will be invaluable to the company.

“Mr Golovanov’s appointment to the board brings useful experience as the time when the company has received its first Exploitation Licence at Olcha and is pushing forward in its activities in Russia,” said Fairfax.

Meanwhile, Canaccord Genuity has reduced its target price for gold producer Orosur Mining (LON:OMI) to 84 pence from 115 pence following the company’s third quarter results.

The Latin America-focused company’s encouraging drill results were countered by higher-than-expected operating costs from the underground ramp-up and open pit mining.

However, the broker maintains that with the underground permit now in place, it expects an uplift in higher grade underground production.

“Our long term investment thesis is unchanged and we continue to expect higher grade underground production to increase output and reduce cash costs,” said the broker, which retains its ‘buy’ rating on the stock.

Shares in Orosur Mining are 47.2 pence.

On the other hand, Canaccord has raised its price target for Australia-based Forte Energy (LON:FTE) after an announcement this week that the company’s resource base has been upgraded by 30 per cent.

This resource update is the first in a series to be released as a result of the recent drilling programme.

The uranium-focused company with projects in West Africa now aims to double its resource base.

The broker commented: “We expect the shares to move upwards; firstly as the resource base is increased further towards the 57Mlb target. Secondly, uranium resource valuations tend to increase as uranium prices rise.”

Shares in Forte were trading at 3.20 pence.

Also in today’s news, Avocet Mining (LON:AVM) has told investors that building a new process plant would provide more flexibility than extending the current plant at its 90 per cent-owned Inata gold mine in Burkina Faso.

Subject to the study being successfully completed, the gold mining company expects this to happen towards the end of 2012.

Avocet’s share price was down 2.25 per cent to stand at 169.6 pence.

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