Broker comments in the UK today. Compiled by Dow Jones Newswires Markets Desk, markets.eu@dowjones.com Contact us in London. +44-20-7842-9464 Markettalk.eu@dowjones.com 0658 GMT [Dow Jones] Credit Suisse adjusts ratings on UK housing stocks in its latest sector note. Brokerage believes buying opportunities remain within the sector, "despite downward revisions to our price and volume forecasts for 2011 and a significant change to our valuation methodology that materially reduces our average target prices." Credit Suisse maintains outperform ratings on Barratt Developments (BDEV.LN) with target price cut to 126p from 252p, Bellway (BWY.LN) with target cut to 737p from 1256p, Taylor Wimpey (TW.LN) with target cut to 36p from 65p and Persimmon (PSN.LN) with target cut to 392p from 678p. Upgrades Berkeley (BKG.LN) to outperform but cuts target to 907p from 920p. However, downgrades Bovis Homes Group (BVS.LN) to neutral from outperform and cuts target to 315p from 780p and downgrades Redrow (RDW.LN) to underperform from outperform and cuts target to 95p from 212p. (ishaq.siddiqi@dowjones.com) 0657 GMT [Dow Jones] Serco's (SRP.LN) announcement of a contract with the Ministry of Justice to provide and operate a new prison at Belmarsh West is "rubber stamping," as the deal was previously announced at the preferred bidder stage in June 2009, says a trader. Thinks it has been reiterated in light of all the spending cuts announced, with the company wanting to allay fears. Shares closed Friday at 567p. (michele.maatouk@dowjones.com) 0649 GMT [Dow Jones] Investec lifts Carrs Milling (CRM.LN) target to 575p from 510p, and keeps ia buy rating. Follows the company announcing two acquisitions, which Investec says sit comfortably within the group's current portfolio of agricultural businesses, extending the product range and geographic footprint. Says the deals have been funded from current banking facilities and should be earnings enhancing in FY '11 and beyond. As a result lifts FY '11 and FY '12 EPS estimates by 7% and 9%, respectively. Shares closed at 480p Friday. (peter.nurse@dowjones.com) 0641 GMT [Dow Jones] Citigroup upgrades Wellstream (WSM.LN) to buy from sell and lifts target price to 580p from 410p. Says the risk-reward balance has turned favorable after the de-rating of the stock in anticipation of a weak 2H10 and despite the likely recovery from 2011, to be driven primarily by orders offshore Brazil. Adds that Wellstream is a growth stock in a highly technical industry, set to benefit from a rise in orders in Brazil, coupled with its operational leverage. "The weak current order intake outside Brazil and lackluster 2010 performance are already expected and priced in," adds Citigroup. Shares closed at 453p. (ishaq.siddiqi@dowjones.com) 0638 GMT [Dow Jones] Credit Suisse upgrades International Personal Finance (IPF.LN) to outperform from neutral, given around 47% potential upside to its 270p price target. Raises its '10 EPS estimate by around 3% to 25.7p to reflect a lower impairment charge and modestly higher asset growth forecasts following the company's recent trading update. Says it was encouraged by the improvement in operating performance in Hungary. Expects 1H results to reiterate positive trends, and says they will act as a positive catalyst for the shares to reverse some recent price weakness. Shares closed Friday at 185p. (michele.maatouk@dowjones.com) 0631 GMT [Dow Jones] Royal Bank of Scotland upgrades Pearson (PSON.LN) to hold from sell, as the shares are now at the brokerage's 865p target and it no longer sees valuation downside. It also no longer sees a risk that Pearson will pay a strategic price for Santillana. Reckons the company will focus on smaller bolt-on deals where the financial returns are likely to be better. Nevertheless, RBS remains concerned about the company's late cycle exposure to US School and counter-cyclical exposure to US College. Shares closed Friday at 867p. (michele.maatouk@dowjones.com) 0629 GMT [Dow Jones] Morgan Stanley initiates Cable & Wireless Worldwide (CW.LN) with an underweight rating and 85p target price. Says that as expectations for gross margin look likely to be disappointed and/or higher data revenues will require higher capital intensity. "The FY11 estimates themselves look like a stretch given weak trends in FY10, yet consensus ratings are overwhelmingly positive," it adds. Brokerage's bull case is for market share growth in the UK/growth in hosting and cloud computing to offset legacy declines to bring gross margin growth. Shares closed at 85p. (ishaq.siddiqi@dowjones.com) 0629 GMT [Dow Jones] UBS downgrades WS Atkins (ATK.LN) to neutral from buy and cuts target to 700p from 750p, saying the stock lacks underlying momentum. Notes economic uncertainty and concerns about cuts in UK public sector spending mean the 12-24 month revenue outlook is weak. Says while margins have been steadily improving over the last 18 months, tough trading conditions continue and headcount reductions are slowing, meaning no earnings momentum. Cuts '11 EPS estimate to 66.65p from 67.28p and '12 EPS estimate to 61.84p from 68.19p. Shares closed Friday at 682p. (michele.maatouk@dowjones.com) 0621 GMT [Dow Jones] Serco Group's (SRP.LN) contract with the Ministry of Justice to provide and operate a new prison at Belmarsh West, London, is clearly good news for the company, says a trader, particularly in light of last week's headlines about cuts in the prison budget. Notes the contract is worth GBP415M over 26.5 years. Shares closed Friday at 567p. (michele.maatouk@dowjones.com) 0619 GMT [Dow Jones] JPMorgan Cazenove initiates Regus (RGU.LN) with an overweight rating and 150 price target. Says as earnings begin to recover and the market regains an appetite for cyclical stocks that will show growth in the next two to three years, Regus should perform very well. "The principal risk to our rating is that the shares are trading on the sentiment of the market, with few links to near term profitability," it adds. Says a double-dip scenario would hit profitability hard, with a consequent impact on the share price. Adds the near term price performance is likely to be volatile. Shares closed at 69p. (ishaq.siddiqi@dowjones.com) 0617 GMT [Dow Jones] ING nudges up Travis Perkins (TPK.LN) price target to 965p from 960p following the company's positive 1H trading update. Says management's confidence in the group's business and cash generation were shown by an indication that dividends would resume this year with an interim dividend of 5p. Expects better growth in '10 and says margins/profits are likely to be stronger than consensus. Also notes there is no apparent rival bid for BSS Group (BTSM.LN). Keeps Travis Perkins at buy. Shares closed Friday at 754p. (michele.maatouk@dowjones.com) 0615 GMT [Dow Jones] UBS upgrades TUI Travel (TT.LN) to buy from neutral, but cuts its target price to 250p from 265p. Says "market risk aversion and concerns that the depreciation in the euro or a late collapse in summer '10 sales will cause significant earnings downgrade seem to have caused the shares to sharply underperform the leisure group." However, feels the stock is now good value, adding it offers around 11.5% cash flow yield. Still, prefers Thomas Cook (TCG.LN), which it rates at buy. TUI shares closed Friday at 209p. (michele.maatouk@dowjones.com) Contact us in London. +44-20-7842-9288 Markettalk.eu@dowjones.com (END) Dow Jones Newswires July 05, 2010 02:58 ET (06:58 GMT)
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