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 0649 GMT [Dow Jones] U.K. banks will have to pay a combined GBP1.1 billion next year and GBP1.9 billion in 2012 in new taxes imposed by the U.K. government, JP Morgan estimates. Adds this is 4% and 5% of group earnings for those years, respectively. Says the levy is "less punitive" than expected, with a cut in U.K. corporate tax rate partially offsetting the expense. (patricia.kowsmann@dowjones.com) 0646 GMT [Dow Jones] Stagecoach's (SGC.LN) FY results are significantly ahead of expectations, says KBC Peel Hunt. Notes FY pretax profit of GBP161.3M and EPS of 18.7p versus the brokerage's forecast of GBP143M and 16.7p. "Improving momentum, continuing balance sheet strength, and management's ambition continue to suggest upside for the share price." Adds, however, the main interest is in potential major acquisitions, which were not addressed. Has the stock at buy, with 220p price target. Shares closed Tuesday at 191p. (michele.maatouk@dowjones.com) 0643 GMT [Dow Jones] Stagecoach's (SGC.LN) FY preliminary results are ahead of consensus forecasts, with pretax profit coming in at GBP161.3M versus consensus of about GBP150M, says an analyst. Notes the UK bus business remains robust and margins are good, while the revenue trend in North America also looks like it is improving. Says current trading remains in line with management's expectations. Shares closed on Tuesday at 190.6p. (andrea.tryphonides@dowjones.com) 0631 GMT [Dow Jones] Kesa Electricals' (KESA.LN) FY adjusted pretax profit, for the year ended April 30, of GBP82M is ahead of expectations, says Arden Partners. Adds the dividend increase is a pleasant surprise. "The commitment to eliminate the near GBP30M of start-up losses by the end of '11/'12 is also welcome," it adds. Says the shares should take the news well. Has the stock at add, with 130p price target. Shares closed Tuesday at 117p. (michele.maatouk@dowjones.com) 0621 GMT [Dow Jones] The levy on banks imposed by the UK Chancellor is not as bad as expected and there is the further relief in the form of an unexpected cut in the corporate tax rate, says Citigroup. Lloyds Banking Group (LLOY.LN) is the clear winner in the budget. It estimates the net effects on Lloyds' FY '12E earnings will be an increase of GBP132M. Other banks will suffer small negative net hits to FY '12 attributable earnings; GBP36M for Standard Chartered (STAN.LN), GBP52M for Royal Bank of Scotland (RBS.LN), GBP52M for Barclays (BARC.LN) and GBP83M for HSBC (HSBA.LN). Lloyds shares could rally strongly from here over the next few weeks. Lloyds rated buy. Shares closed Tuesday at 59p. (andrea.tryphonides@dowjones.com) 0619 GMT [Dow Jones] The VAT increase announced by the UK Chancellor will benefit UK water and energy networks, says Deutsche Bank. Says the increase will be a benefit for the regulated networks since it will feed through to inflation via the retail price index. Says the government's revised RPI forecasts look extremely attractive and would imply asset base and earnings growth for the UK water and energy networks in excess of what is currently reflected in share prices or consensus estimates. Notes though RPI inflation benefits may be slightly offset by reductions in capital allowances for investment in plant and machinery. (andrea.tryphonides@dowjones.com) 0612 GMT [Dow Jones] Citigroup lifts Whitbread (WTB.LN) price target to 1700p from 1645p following the company's 1Q update. Citigroup raises its '11 EPS forecast to 104.7p from 99.7p and its '12 EPS estimate to 114.9p from 109.5p to reflect the strong 1Q performance at Premier Inn. However "Whitbread's capital-heavy rollout model absorbs considerable free cash flow, which reduces our valuation upside. Combined with the more limited international exposure and lower operational gearing, this leads us to retain our hold rating." Shares closed Tuesday at 1531p. (michele.maatouk@dowjones.com) Contact us in London. +44-20-7842-9288 Markettalk.eu@dowjones.com (END) Dow Jones Newswires June 23, 2010 02:49 ET (06:49 GMT)