Broker tips: Glaxo, Go Ahead, Modern Water

The Centers for Disease Control and Prevention (CDC) issued new guidelines for the use of antivirals in the treatment of flu on Tuesday, which should boost revenues drugs giant GlaxoSmithKline (GSK) receives from its Relenza flu treatment.The ruling that Tamiflu and Relenza should promptly be given to hospitalised patients suspected of having the flu rather than waiting for influenza test results supersedes the CDC's previous guidance that the drugs should be reserved for patients with more severe illnesses and those in high risk groups.Broker Panmure Gordon is forecasting Relenza revenues of £700m for 2009, and expects this figure to rise to £1bn in 2010 before sliding back towards £250m per annum from 2011 onwards.The stock is trading on 11 times projected 2010 earnings, in line with its European peers. 'Growth is not going to be easy and will be fairly low quality in the short term, with cost containment central to the thesis, but we expect the dividend yield of 5.3% to provide support,' the broker said, adding that the stock should prove an attractive purchase, particularly to risk-averse investors.Nomura said recent results from transport firm Go Ahead were ahead of expectations, prompting the broker to upgrade its 2010 earnings estimates.Nomura is now forecasting earnings per share for the year to end-June 2010 of 122.5p, up from its previous forecast of 108.5p and slightly above market consensus of 120.18p.The price target has been upped to 1580p to reflect the upgraded UK bus earnings as well as net debt. Nomura rates the shares a 'buy', trading on a 12-month forward EV/EBITDA (enterprise value/earnings before interest, tax, depreciation and amortisation) multiple of 4.8, compared with the long-term average for the company of 5.6.The price target for Modern Water has been upped by its house broker KBC Peel Hunt after the desalination firm's interim results.KBC has raised its fair value for Modern Water Group (MWG) shares from 69p to 77p and reiterated its 'buy' recommendation.'MWG's previous undervaluation, where it traded at a 30% discount to the reported cash balance, has now corrected. There is still cash backing today of 43p per share, but we believe that, as the technology is proved to work in a commercial context, investors will apply a premium to reflect the strong potential of the desalination market,' asserts KBC analyst Andrew Shepherd-Barron.