Broker tips: Retailers, Cookson, Punch

Nomura confirms its 'neutral' stance on the general retail sector after the impact of the snow on sales and bearing in mind the recent underperformance of the shares.The Japanese broker said that weekly trading data from upmarket food chain Waitrose and its department store owner John Lewis suggest that full price sales have fallen short of expectations, due to the bad weather in late November and around Christmas."We estimate this could have impacted non-food specialist retailers anywhere between 2-4% over the quarter as a whole prior to the post Christmas sales period," says analyst Fraser Ramzan. "Sales may have been recovered post Christmas, but inevitably at lower margins."Nomura notes that the customers that did venture out seemed to prefer to shop in one place, and so supermarkets and department stores such as Marks & Spencer (M&S) may have fared better than most.As the sector underperformed last month, it left a poor outturn broadly discounted, but Ramzan says that the renewed squeeze on disposable income in the current year may be a greater issue."Our preference remains for self-help stories such as M&S and Dixons," he adds.Peel Hunt is attracted to the recent press rumours surrounding Punch Taverns' sale of its interest in Matthew Clark, suggesting that the transaction would be a "dynamic confirmation of the value" of the company.The Sunday Times reported that the pub owner had been approached by drinks wholesaler Waverley TBS to sell its 50% interest in drinks supplier Matthew Clark.The broker estimates the value of the sale to be £59m on the basis of the disposal of the other half of the company by Constellation Brands to Champ Private Equity of Australia before Christmas.Analyst Paul Hickman says that the "receipt by the holding company of the proceeds of a disposal would be dynamic confirmation of the value of Punch, independent of its A and B securitisations, which we value at 96p."The broker confirms its positive stance on the stock with a 'buy' rating. Panmure Gordon (PG) says that engineer and ceramics group Cookson appears undervalued versus the sector and upgrades forecasts, but remains prudent on valuations over the full year.The broker has raised Cookson's 2011 revenue estimates by 5% to £2.55bn, with the uplift expected to be driven largely by the Ceramics division.Analyst Oliver Wynne-James says that "Despite being able to disappoint on drop-through and cash flow generation, we expect the shares to fare well during the first quarter in 2011 with help from momentum in Foundry and from the "firing-up" of Chinese steel industry."While PG narrowly retains its 'buy' recommendation on the stock, it notes that the shares can be treated cruelly after each Spring and so the tendency to take profits should rise as the year progresses.For the time being, the broker raises its target price from 670p to 730p on the back of an upgrade in projected turnover.