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 0720 GMT [Dow Jones] Morgan Stanley downgrades Halfords (HFD.LN) and Kingfisher (KGF.LN) to equalweight from overweight; it keeps its Halfords target at 540p but cuts Kingfisher to 225p from 240p. Even before the budget, there were signs UK consumer spending was under pressure, notes Morgan Stanley. It says the combination of tax rises and growing public sector unemployment looks set to make things worse. Morgan Stanley also downgrades WH Smith (SMWH.LN) to underweight from equalweight and cuts the target to 400p from 455p. And it downgrades Next (NXT.LN) to equalweight from overweight although it raises its target to 2250p from 2160p. The bank says overall consensus forecasts for FY'11/'12 are too high and it cuts its own forecasts by around 10%. The new target prices don't leave enough upside to remain overweight Kingfisher or Halfords, notes the bank. It trims DSG International (DSGI.LN) price target to 24p from 27p, Kesa Electricals (KESA.LN) to 100p from 105p Go-ahead target to 1250p from 1275p - all underweight. The bank cuts Home Retail Group (HOME.LN) to 230p from 275p and Marks & Spencer (MKS.LN) to 325p from 340p - both equalweight. Debenhams (DEB.LN) target goes to 72p from 85p - overweight. (michele.maatouk@dowjones.com) 0712 GMT [Dow Jones] Goldman Sachs adjusts target prices on online gaming stocks. Raises Paddy Power (PLS.DB) price target to EUR30 from EUR28.6, noting the company's strong trading as reported in its May update. Cuts Partygaming (PRTY.LN) price target to 316p from 320p to reflect the adverse EUR/USD and GBP/USD exchange rates and lower expectations for networking services in '10 and '11. Nudges down Sportingbet (SBT.LN) target to 80p from 82p following the company's 3Q results and to account for the loss of revenues in France. Has all three stocks at neutral. (michele.maatouk@dowjones.com) 0706 GMT [Dow Jones] Berkeley Group's (BKG.LN) FY results against a backdrop of resilient pricing generates pretax profit of GBP110.3M, around 3% ahead of Shore Capital's forecast. Shore says the company has a strong cash position and is well placed to continue buying land at attractive prices. Shore maintains a buy rating and expects the company's NAV to rise strongly in the medium term. Shares +1.4% at 812p. (peter.nurse@dowjones.com) 0657 GMT [Dow Jones] Nomura downgrades BT Group (BT.A.LN) to reduce from neutral, but nudges up the price target to 150p from 145p. Strong momentum on cost reduction allows the company to give clear guidance to '13, says Nomura. However, the good news is mostly priced-in, says the brokerage. "Consensus forecasts [are] quick to discount the upbeat message and recent favorable regulatory moves on pricing." Also, BT has one of the worst revenue growth outlooks in the sector, says the brokerage. It adds that with no more compulsory headcount cuts until the end of '11, BT will struggle to grow Ebitda. On top of this, uncertainty on the dividend outlook will linger. Shares closed Thursday at 132p.(andrea.tryphonides@dowjones.com) 0647 GMT [Dow Jones] Credit Suisse trims Henderson Group (HGI.LN) price target to 195p from 200p. Reduces earnings estimates by 2%-3% throughout the forecasting period, in line with the weaker markets witnessed over the past few months. Also, is analyzing the company's trends for retail assets under management for the month to May 31 '10. Says overall, retail funds are down 4.1% on the previous month, though ahead of both the FTSE 100 and S&P 500. Keeps the rating at outperform. Shares closed on Thursday at 124p. (andrea.tryphonides@dowjones.com) 0643 GMT [Dow Jones] UBS raises Petrofac (PFC.LN) target price to 1375p from 1350p following the company's 1H update. Says it showed continued confidence in the successful growth of the business. The bidding pipeline remains strong and performance on existing contracts is in line with management's expectations, UBS adds. Raises FY'11 EPS estimate to $135.5 from $134. Keeps the stock at buy. Shares closed Thursday at 1223p. (michele.maatouk@dowjones.com) 0637 GMT [Dow Jones] Goldman Sachs cuts Micro Focus International (MCRO.LN) price target to 510p from 620p to reflect potential execution risks. Says the departure of CFO Nick Bray is a big setback, and despite the sharp fall in the shares does not believe risk-reward is compelling. Notes Bray was one of the key architects of the turnaround post IPO, and had been an important pillar in the execution of the organic growth. "With a new CEO...and still lots to do in terms of the go-to-market model, we are mindful of short-term execution risks." Keeps the stock at neutral. Shares closed Thursday at 460p. (michele.maatouk@dowjones.com) 0630 GMT [Dow Jones] The positive response by the pension regulator to British Airways (BAY.LN) earlier this week "could bode well for the ongoing review of BT's (BT.A.LN) agreement", Royal Bank of Scotland says. "There seem to be few certainties in actuarial science and we know BT's pension funding remains a material uncertainty for investors. But we believe the next six months could see a steady stream of news that supports our view that BT's agreement with the trustees is prudent and that the valuation of GBP7.5b we have in our SotP (sum of the parts) is reasonable," RBS says. Broker sees about 25% upside from the current price and believe the market is over-discounting BT's pension funding position. RBS has a buy rating on BT and 170p target price. (lilly.vitorovich@dowjones.com) 0626 GMT [Dow Jones] UBS raises DS Smith (SMDS.LN) price target to 155p from 145p following the company's robust 2H update. Notes free cash flow was strong, while the company's outlook was encouraging. Sees potential for acquisitions/organic growth as well as divestments as the group has a strong balance sheet. Raises FY'11 EPS estimate to 15.58p from 13.73p and FY'12 EPS estimate to 18.33p from 15.88p. Keeps the stock at buy. Shares closed Thursday at 122p. (michele.maatouk@dowjones.com) 0623 GMT [Dow Jones] Citigroup reduces Kazakhmys (KAZ.LN) price target to 1300p from 1610p. Says in the near term, the shares lack any major catalysts beyond a reversion in the copper price. Estimates that given its longer-dated growth versus the peer group, the shares are currently discounting $2.75/lb copper versus the spot price of $2.95/lb. Says the valuation gap needs to be greater for the brokerage to become more positive on the shares. However, thinks Kazakhmys offers an inexpensive vehicle to invest in copper and electricity tariff inflation in Kazakhstan. Maintains hold. Shares closed Thursday at 1110p. (andrea.tryphonides@dowjones.com) 0612 GMT [Dow Jones] Morgan Stanley downgrades ITV (ITV.LN) to equalweight from overweight and cuts the price target to 66p from 70p. The brokerage is setting "realistic advertising expectations" for a tougher UK economic background. Meanwhile, it notes that the UK Culture Secretary has said the contract rights renewal "is an example of micro-regulation we can do without." Abolition of CRR could enhance ITV EPS in the first full year by 13-15% says the bank. Shares closed Thursday at 55.3p.(andrea.tryphonides@dowjones.com) 0611 GMT [Dow Jones] Morgan Stanley downgrades G4S (GFS.LN) to underweight from equalweight but raises target price to 270p from 255p. Thinks '10-'13 earnings are unlikely to grow at the previous med-teens rate and reckons the valuation is not compelling. Sees 4% downside to its new target price. Thinks the stock is well-liked but says there are better opportunities elsewhere. Shares closed Thursday at 282p. (michele.maatouk@dowjones.com) Contact us in London. +44-20-7842-9288 Markettalk.eu@dowjones.com (END) Dow Jones Newswires June 25, 2010 03:20 ET (07:20 GMT)