UK MARKET TALK ROUNDUP: BROKERS COMMENTS

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 0848 GMT [Dow Jones] UK banks should benefit from the positive tone of Chancellor George Osborne's and Bank of England Governor Mervyn King's Wednesday night speeches to City executives, says RBS banks analyst, who recommends buying their shares. One particular point of interest was the apparent de-emphasis on breaking up commercial and investment banks, with King instead putting more weight on orderly bankruptcy procedures and living wills, the analyst says. (margot.patrick@dowjones.com) 0828 GMT [Dow Jones] WS Atkins (ATK.LN) FY figures are good says Arden Partners. It notes normalized pretax profits of GBP96.5M versus the brokerage's forecast of GBP90M. Of key importance is the fact that Atkins has been actively cutting its cost base for some time, says Arden. Arden says Atkins is very well run and top quality, but Arden's recommendation remains sell. "The P/E to March '11 is 11.1x. This is too high in our view given the outlook for infrastructure investment in the UK." Shares 3.7% at 700p. (michele.maatouk@dowjones.com) 0800 GMT [Dow Jones] Land Securities' (LAND.LN) forward sale of the Park House development de-risks the development pipeline and offers the potential for a more compelling return at a low risk, says Evolution Securities. Says "the sale price of GBP250M represents a GBP33M premium to the total development costs incurred to date and represents a 15% profit on cost." Maintains add rating and target price at 700p. Shares flat at 629p. (anita.likus@dowjones.com) 0733 GMT [Dow Jones] Stagecoach Group's (SGC.LN) winning of an arbitration ruling is a strong positive and brings more certainty around full-year profitability, says an analyst. The ruling is related to the timing of assessing revenue shortfalls in this fiscal year, affecting subsidies Stagecoach receives for running the South Western trains franchise. A related ruling on car park revenue against Stagecoach is less important, the analyst says, as that one is worth much less than the revenue timing issue had been. Shares +0.9% at 188p. (margot.patrick@dowjones.com) 0732 GMT [Dow Jones] KBC Peel Hunt initiates coverage on Misys (MSY.LN), with a buy rating and 300p target price. "Misys has a high quality management team and looks to have achieved a good balance between cost control and investment in new products. A global footprint and high level of recurring revenues helped the company to show resilience during the downturn," analyst Paul Morland says. He anticipates a period of strong earnings growth as bank spending recovers, noting Misys "capitalises on its dominant global position and reaps the rewards of operational gearing and strong cash conversion." Shares -0.5% at 255p. (lilly.vitorovich@dowjones.com) 0730 GMT [Dow Jones] HSBC initiates coverage of Cobham (COB.LN) and BAE Systems (BA.LN) with neutral ratings 250p and 350p price targets, respectively. HSBC notes governments across the world are experiencing severe fiscal pressure as a result of stimulus spending and bailout efforts. The bank says investors fear the current slowdown in spending will become a downturn, and this has put presure on sector valuations. "Ultimately, we think a sector re-rating will depend on the direction of global defence budgets." Cobham shares -0.1% at 234p and BAE -0.6% at 324p. (michele.maatouk@dowjones.com) 0717 GMT [Dow Jones] Seymour Pierce downgrades BP (BP.LN) to hold from buy. Notes BP has cancelled its 1Q dividend, will not declare a dividend in respect of 2Q and 3Q, and will consider the resumption of dividend payments at the time of 4Q results in early 2011. Says given the market will have to wait until 1Q '11 for guidance on this dividend, it is hard to see why the shares will do better than perform in line with the wider market. "Whilst BP continues to emphasize its financial strength, the message is not entirely consistent with that promulgated at the recent investor conference call. Indeed, the company is now talking about a significant shrinking of organic capital expenditure." However, shares +6.8% at 361p, after a sharp selloff. (michele.maatouk@dowjones.com) 0712 GMT [Dow Jones] Land Securities's (LAND.LN) sale of its Mayfair Park House development for GBP250M is "attractive" says an analyst at JPMorgan. "We did not expect this disposal." The analyst says the deal is positive for shareholders as it will be accretive to net asset value, it will crystallize profit with minimum risk and the company will be able to reinvest the proceeds. The analyst adds that the transaction shows demand for prime property remains strong. Neutral rating on the shares, 765p target. Shares +0.2% at 629p. (anita.likus@dowjones.com) 0700 GMT [Dow Jones] Credit Suisse upgrades British Sky Broadcasting (BSY.LN) to neutral from underperform after News Corp (NWS) proposed an offer of 700p per share for the 60.1% in BSkyB it does not own. The brokerage boosts its target price to 700p from 430p. CS says the eventual price of the outstanding shares "should be agreed at around 740p per share." The brokerage adds: "This reflects the time value of money; the regulatory risk, small in our view and the risk that the shareholders do not reach agreement and the offer falls through - in which case the shares would trade back below 600p." News Corp, which owns Dow Jones & Co, the publisher of this newswire, has a stake of about 39% in BSkyB. Shares open -0.4% at 699p. (ishaq.siddiqi@dowjones.com) 0653 GMT [Dow Jones] Societe Generale upgrades Rio Tinto (RIO.LN) to buy from hold, and raises its price target to 4150p from 3900p. Expects base metals prices to trend higher as Chinese infrastructure spending remains very strong, and thinks spot prices of bulk commodities should be supportive. Says the risks related to the Australian mining tax, the ongoing European sovereign debt crisis, and fears Chinese measures to curb property speculation may result in a sharp slowdown in economic activity are now well discounted by investors. Shares closed Wednesday at 3339p. (michele.maatouk@dowjones.com) 0652 GMT [Dow Jones] Bank of America Merrill Lynch downgrades Unilever (UN) to neutral from buy. "We raise our 12-month price objective to EUR26.5 [from EUR25.0] to reflect the higher estimates but cut our rating to neutral reflecting lower relative upside within our consumer staples universe," says the brokerage. Says recent forex movements, particularly for the stronger US dollar and emerging market currencies lead the brokerage to revise earnings forecasts for Unilever. Says earnings estimates increase by 3% in FY '10 and by 4% in FY '11/'12 to incorporate a EUR/USD exchange rate of $1.22 and sterling/dollar rate of $1.48. Shares closed at EUR23.37 in Amsterdam, and at 1914p in London. (ishaq.siddiqi@dowjones.com) 0637 GMT [Dow Jones] UBS raises Filtrona (FLTR.LN) price target to 260p from 245p following the company's surprise trading update. Says the update "now means consensus has been upgraded three times in the first six months of the year. That is a strong performance from a stock that historically has disappointed with no earnings momentum." Raises '10 EPS estimate to 20.56p from 18.72p, and '11 EPS estimate to 22.60p from 20.67p to reflect strength in Protection & Finishing and in the porous technologies business. Keeps the stock at buy. Shares closed Wednesday at 223p. (michele.maatouk@dowjones.com) Contact us in London. +44-20-7842-9288 Markettalk.eu@dowjones.com (END) Dow Jones Newswires June 17, 2010 04:48 ET (08:48 GMT)