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Broker tips: AstraZeneca, AB Foods, Dunelm
Fri, 6th Jul 2012 11:31
Jefferies has downgraded its recommendation for pharmaceuticals giant AstraZeneca from 'buy' to hold' after the recent strong performance in the shares.
"The shares have traded as low as 2,578p during the last few months as weak markets and irrational fears over potential large-scale M&A that could threaten current dividend expectations have been reflected in the stock price," the broker said in a research report on Friday.
"As we expected, these fears have subsided as other commentators have begun to understand the importance of the dividend and share repurchase programme following reassuring commentary from management."
Panmure Gordon believes that Elephant Atta is a perfect fit for Associated British Foods and has maintained its 'buy' recommendation and 1,300p target price on the FTSE 100 food, ingredients and retail firm.
Panmure said that the price (£34m) equates to just 1.9 times sales of £17.8m and 5.3 times EBITDA (earnings before tax, depreciation and amortisation) of £6.4m, "which in our view is an excellent price given ABF should also be able to achieve some synergies when it transfers production to its Tilbury site once it has received regulatory clearance".
Nomura has hiked its target price for homewares retailer Dunlem from 530p to 580p and reiterated its 'buy' call on the stock following Thursday's solid fourth-quarter trading update.
The broker said that strong cash generation means that a cash return to shareholders is appearing more likely in the near term. "We now model in a total dividend of 39p (25p special), suggesting a 2012 dividend yield of 7.5%," the broker said.
"In our view, Dunelm remains the key growth stock in the UK, with a strong balance sheet, space potential and c24% return on invested capital."
BC
"The shares have traded as low as 2,578p during the last few months as weak markets and irrational fears over potential large-scale M&A that could threaten current dividend expectations have been reflected in the stock price," the broker said in a research report on Friday.
"As we expected, these fears have subsided as other commentators have begun to understand the importance of the dividend and share repurchase programme following reassuring commentary from management."
Panmure Gordon believes that Elephant Atta is a perfect fit for Associated British Foods and has maintained its 'buy' recommendation and 1,300p target price on the FTSE 100 food, ingredients and retail firm.
Panmure said that the price (£34m) equates to just 1.9 times sales of £17.8m and 5.3 times EBITDA (earnings before tax, depreciation and amortisation) of £6.4m, "which in our view is an excellent price given ABF should also be able to achieve some synergies when it transfers production to its Tilbury site once it has received regulatory clearance".
Nomura has hiked its target price for homewares retailer Dunlem from 530p to 580p and reiterated its 'buy' call on the stock following Thursday's solid fourth-quarter trading update.
The broker said that strong cash generation means that a cash return to shareholders is appearing more likely in the near term. "We now model in a total dividend of 39p (25p special), suggesting a 2012 dividend yield of 7.5%," the broker said.
"In our view, Dunelm remains the key growth stock in the UK, with a strong balance sheet, space potential and c24% return on invested capital."
BC
