CLL.L Share News (CLL)

While the market gave an enthusiastic reception to Thursday's update from Kingfisher, Nomura Securities suggests the DIY retailer's recovery story is only halfway through, and we don't know the ending yet."The UK and France were in line with consensus expectations, but highlighted ongoing progress on in-store standards, sourcing initiatives and cost control. Management was quick to highlight that the current three-year plan is only half way through, despite high market expectations of delivery ... but what's next?" asks Nomura analyst Christopher Walker.In an attempt to answer his own question Walker suggests "Opportunities in France (through the Brico Depot expansion), further trade initiatives in the UK and further expansion in Poland, combined with options for growth in Spain and China among others, are likely to be the focus. A strong balance sheet and cash generation may help to facilitate these growth initiatives beyond the current January 2012 plan."After the better than expected interim figures Nomura has edged up its full year forecasts by around 2%, due largely to a lower full year interest charge. It is now forecasting profit before tax for the current financial year of £653m.The stock trades at a small premium to the sector, the broker notes. It is maintaining its neutral rating and 300p price target but sees "increasing evidence of continued gross margin improvement through sourcing initiatives."The recently renamed YouView, previously known as Project Canvas, offers an opportunity for internet service provider TalkTalk to crank up its average revenue per user, Daniel Stewart believes.The Project Canvas consortium, comprising Arqiva, the BBC, BT, Channel 4, Five, ITV and TalkTalk has confirmed that the new set-top based service will launch next year, much to the annoyance of British Sky Broadcasting and Virgin Media, which regards the whole enterprise as anti-competitive.The service, which will combine Freeview channels with web-based and video on demand programmes, gives TalkTalk the chance to increase its current average revenue per user (ARPU), estimated at £23.95."TalkTalk has concentrated on providing a cost-effective, plain vanilla broadband service to its 4.24m subscribers (24%E of the UK residential broadband total), and is currently assimilating its acquired Tiscali UK broadband subscriber base," notes Daniel Stewart analyst Mike Jeremy.Looking at the experience of French operator Iliad, however, Jeremy thinks TalkTalk should be able to squeeze more money out of its customers once YouView launches."Iliad's quad-play offering has enabled it to raise its €29.99 base price ARPU towards €36 (£31.30), 31% above TalkTalk's. Our price target, 180p, is at the top end of a range of positive market ratings from 160p upwards, and is based on the expectation that TalkTalk will offer YouView services as a means of boosting ARPU," the broker said.Singer Capital Markets is initiating coverage of market research and consulting group Cello with a positive recommendation, saying that most of the company's earn out obligations from previous takeovers are behind it and the company is in a position again to expand through acquisition. The company's recent interim results demonstrated a return to positive growth despite extreme near term headwinds in the public sector, which Singer rates as "an exceptionally strong performance in this context."The broker thinks there are three main reasons to buy the shares. First is the aforementioned revenue growth. "Acquisitions are back on the agenda and will enhance growth. Cello's biggest business segment, Healthcare, is driving growth and international expansion offsetting the short term public sector headwind," the broker said. Cello chief executive Mark Scott told Sharecast earlier this week that the company "will buy again, probably in America" and that the plan is to double the size of Cello in the next two or three years.The second reason to buy cited by Singer is the company's strong positions in market research and healthcare. These are "scarce assets in a consolidating market."The broker also believes the shares are undervalued because the earnings are in the low part of the cycle. Compared to the valuation of its peers, the stock is cheap, and Singer thinks it is also undervalued on a sum of the parts (SOTP) basis and as a prospective takeover target. The stock trades on 6.6 times projected earnings per share for 2010 while the ratio of enterprise value to earnings before interest, tax, depreciation and amortisation is just 4.6. "This is clearly low," the broker argues. "If the share price does not recover then it is possible that Cello could become a target, given the scarcity value of its two operating units. We use a blended SOTP and peer based valuation to derive our 12 month target price, which we set at 71p, indicating over 50% upside," the broker concluded.