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Broker spotlight: Whitbread, Petrofac, AB Foods, Centrica, International Ferro...

Published: 11:19 26 Feb 2015 GMT

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It was a day of mixed messages from the City’s analysts. 

Goldman Sachs did the house broker trick of maintaining its ‘buy’ recommendation on British Gas owner Centrica (LON:CNA) while quietly chopping its price target by 12%.

Even after the recent dividend cut, the 4.8% yield is a premium to the sector while earning this year (2015) will be a trough, the US house said. 

Lower earnings expectation his year are behind the price target reduction to 285p, from 323p, but a strategic review in July represents further potential upside, it added. 

The review is likely to focus on opportunities in the downstream supply business, while by July the outcome of the General Election will be known as will the Competition and Markets Authority (CMA) inquiry into the utilities industry.

UBS‘s stance on Costa coffee and Premier Inn owner Whitbread (LON:WTB) was the reverse. It maintained its ‘sell’ rating even though its target price rises to 4,700p.  Like a double shot capucchino with sugar, the valuation is just too rich said the broker. On the other side, there were upgrades by JP Morgan Cazenove and Nomura after Whitbread’s full-year results yesterday.

Another consumer giant AB Foods (LON:ABF) has been raised to ‘buy’ from ‘hold’ by Berenberg, with a price target of 3,400p compared to 2.900p previously.

The business has lent heavily on Primark in recent years, but it’s time for the food divisions to shake a leg said the German broker.

But with sugar’s woes easing, 2016 (September year-end) should see the start of a decade-long stretch of double-digit earnings growth as the drags on Primark are removed.

Ferrochrome specialist International Ferro Metals (LON:IFL)  should swing back in to profit in the year after this according to joint house broker SP Angel. 

Prices are set to rise and production is back to over 200,000 tonnes annually. The price target is 14p and ‘buy’ the rating.

Petrofac (LON:PFC) is fancied by three brokers this morning  - Deutsche Bank, JP Morgan Cazenove and Citi.

Barratt Developments (LON:BDEV) is building momentum, Deutsche Bank reckons, targeting a share price of 556p.

Numis Securities wants a slice of Domino’s Pizza Group (LON:DOM). The broker has issued a Buy rating on the firm.  

Goldman Sachs lifted its price target for Man Group (LON:EMG).  


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