Broker tips: Dixons Carphone, Wizz Air, TalkTalk

(ShareCast News) - Dixons Carphone racked up some healthy gains on Thursday as Credit Suisse initiated coverage of the stock at 'outperform' with a 12-month 420p price target, implying a one-year total shareholder return of 30%.CS argued that Dixons Carphone was a rare example of a successful retail merger, pointing out that since the combination just over two years ago, it has gained significant market share in its core markets and demonstrated robust operating and best-in-class profitability metrics in what is widely considered to be one of the toughest sub-sectors in retail - consumer electricals retailing."Despite robust like-for-like growth and profit delivery this year, shares are down 33% year to date on investor concerns about weak sterling and demand next year."We argue that Dixons Carphone will pass through higher costs, while demand is likely to remain stable and the flux in the industry should help the company gain market share in the UK and Europe."The bank reckons Dixons can deliver 3-4% top-line growth and strong cash generation over the next four years thanks to additional benefits from planned synergies, the ongoing store optimisation and focus on Services. Goldman Sachs upgraded shares in Hungarian low-cost airline Wizz Air to 'buy' from 'neutral' and raised its price target to 2100p from 1753p."We see Wizz as very well positioned to continue growing profitably in Central Eastern Europe (CEE) capitalizing on a solid CEE macro environment, low CEE air travel penetration and market share gains from poorly positioned local carriers," said Goldman.The investment bank also feels the de-rating in the shares after the Brexit referendum creates an attractive entry point for the airline among competitiors like Ryanair and Easyjet.Following the company's recent results the bank increased its full year 2017-19 earnings per share (EPS) by 13% and added it to the Central & Eastern, Middle East and Africa (CEEMEA) Focus List with 24% upside potential.Monthly traffic statistics should continue to show strong growth with robust load factor trends and there is potential for the exit of weak CEE incumbents, especially if oil prices rise or competition intensifies, according to the analysts.The bank sees the airline as a strategic asset with a unique CEE network and industry leading cost per seat, below that of rival Ryanair, and see merger and acquisition optionality in the long-run. TalkTalk was under the cosh on Thursday as JPMorgan Cazenove downgraded the stock to 'underweight' from 'neutral' and slashed the price target to 150p from 230p.The bank said the big drop in the shares since the first-half results reflects increased uncertainty about the future trading prospects for the company, an issue it expects to persist until at least the full-year results in May 2017 as TalkTalk attempts to reverse customer losses in its core consumer broadband business."Execution risk remains high, in our view, and a failure to stabilise the retail customer base could lead to further downgrades to consensus estimates," JPM said.The bank noted TalkTalk has been looking to stem the outflow of customers since the cyber attack through investments to improve network performance customer service, as well as a new pricing model. It said results of these attempts have been mixed, with initial strong re-contracting rates among customers reaching the end of promotional periods offset by churn among customers facing a price increase.JP Morgan also said it reckons a more conservative dividend policy would be appropriate in light of the current trading environment."This would provide a bigger liquidity buffer especially given the continued interest in 'full fibre' network projects," it said.