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 0642 GMT [Dow Jones] BP (BP) changes its management and shifts strategic direction in moves that should lead to "a positive trading outlook for the company in the medium term," says ING analyst Jason Kenney. Sees asset disposal program of $30B over 18 months as indicative of the quality of the company's portfolio. And expects BP to rebuild its credibility with the assets it retains. "I don't see them being kicked out of the U.S." Has a buy recommendation and a 12-month to 3-year price target of 712p. Shares closed Monday at 417p. (jeffrey.sparshott@dowjones.com) 0642 GMT [Dow Jones] Morgan Stanley raises Tullow Oil (TLW.LN) price target to 1550p from 1500p following the announcement of a significant new find offshore Ghana. Says the find should remind investors that the exploration story is far from over at Tullow. "Newsflow in the coming weeks should be supportive in our opinion and there should be further enthusiasm as the Ghana campaign moves on to drill the Onyina prospect." Maintains overweight rating on the stock. Shares closed Monday at 1239p. (michele.maatouk@dowjones.com) 0642 GMT [Dow Jones] Morgan Stanley raises Pearson (PSON.LN) price target to 1150p from 1100p following the company's impressive 1H numbers. Notes the fact Pearson upgraded its guidance for '10 and Morgan Stanley raises its '11 EPS forecast by 5% to 74.8p. Says last year, reassuring Pearson interims dispelled fears about the US education markets and prompted strong price performance in the stock and reckons similar conditions could prevail this year. Keeps the stock at overweight. Shares closed Monday at 1029p. (michele.maatouk@dowjones.com) 0642 GMT [Dow Jones] ARM Holdings' (ARM.LN) 2Q update is solid, says a trader. The trader notes sales are ahead of expectations, driven almost entirely by an unexpected revenue catch-up of some $9M in the processor division. PD is strong in both licensing and royalties, while physical IP division licensing is also solid, even if royalties are a little light the trader says. Shares closed Monday at 346p. (michele.maatouk@dowjones.com) 0641 GMT [Dow Jones] Goldman Sachs downgrades Logica (LOG.LN) to sell from neutral and cuts target price to 110p from 145p. Says the stock has the lowest upside potential in Goldman's coverage universe, and the brokerage is 5%, 16% and 22% below 2010-12 EPS consensus respectively. This "in our view does not capture the top-line risks from UK public sector spending cuts and structural decline in margins owing to the group's non-scalable offshore model," adds Goldman. Brokerage says it continues to advocate owning structural winners and remains buy rated on Capgemini (CAP.FR) due to its global scale and established offshore model. Logica shares closed at 104p. (ishaq.siddiqi@dowjones.com) 0634 GMT [Dow Jones] Xstrata's first half output "looks a little bit light on coal," says a London-based analyst. "That would be the primary issue," he notes. He says there was nothing in particular that was worrisome about the coal figures, except that thermal output in Australia, South Africa and Colombia were lower. "This does mean that [financial] numbers will have to be revised down," he says. Xstrata closed Monday +0.2% at 1036.5p. (alex.macdonald@dowjones.com) 0633 GMT [Dow Jones] Xstrata's (XTA.LN) first half output was in line with expectations, says Charles Kernot of Evolution Securities. "The big increase in ferrochrome production [was due to the] reopening of [production capacity] from the depths of the downturn," he says. Evolution Securities has an add and 1060p target price. Xstrata closed Monday +0.2% at 1036.5p. (alex.macdonald@dowjones.com) 0606 GMT [Dow Jones] Citigroup downgrades Dana Petroleum (DNX.LN) to hold from buy, but raises its price target to 1655p from 1510p. This follows Korea National Oil Corp's announcement of an 1800p per share indicative offer for Dana and the 13% share price increase in reaction to the offer. "Acknowledging upside to the 1800/share indicative offer, near-term exploration drilling and the possibility of a superior offer we no longer feel sufficient fundamental opportunity exists to remain buyers of this stock which now trades at a 13% premium to NAV and a +20% premium to the sector," says Citi. Shares closed Monday at 1690p. (michele.maatouk@dowjones.com) 0602 GMT [Dow Jones] UBS upgrades Great Portland Estates (GPOR.LN) to neutral from sell, and raises its price target to 320p from 275p. Notes the strong and improved outlook for the Central London office market. Says the company's relatively low gearing gives it the capacity to fund potential developments and make further acquisitions. Nevertheless, notes the group has warned capital growth is moderating, and UBS estimates revenue growth will be restricted as the company commits to new developments and refinances its cheap debt. Shares closed Monday at 306p. (michele.maatouk@dowjones.com) Contact us in London. +44-20-7842-9288 Markettalk.eu@dowjones.com (END) Dow Jones Newswires July 27, 2010 02:42 ET (06:42 GMT)