| CATEGORY: BROKER RECOMMENDATIONS SECTOR: GENERAL FINANCIAL |
Broker tips: LSE, Atkins, Informa |
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Wed 25 Nov 2009
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LONDON (SHARECAST) - The London Stock Exchange is feeling the hot breath of competition down its neck and broker Merrill Lynch thinks the exchange is likely to lose more market share before new technology developments arrive to halt the decline.
The broker thinks the shares look ‘relatively fully valued’ and has retained its ‘under perform’ rating and 710p price target after the bourse’s interim results.
Bid speculation will continue to support the share price, however, argues Jonathan Jackson, head of Equities at Killik & Co., which just about justifies holding the shares, in Killik’s view.
Nomura Securities has cooled on Lloyd’s List publisher Informa after the business information firm confirmed it is in bid discussions with the shareholders of Springer Science & Business Media.
Though synergies from a merger should be significant, with Nomura estimating £54m of savings, and the quality of earnings would be higher, ‘with academic and professional publishing accounting for over 80% of pro forma EBITA [earnings before interest, tax and amortisation]’, Nomura has downgraded the stock from ‘buy’ to ‘hold’.
‘In the absence of any firm information on pricing, synergies or financing, it is impossible for us to continue to recommend buying the shares until the situation becomes clear,’ the broker concludes.
Fears about the strength of the business of design and engineering consultancy group WS Atkins appear to have been misplaced, judging by Wednesday’s interim results.
The share price shot up in the wake of the release of the results but is still some 60p below where it was at a month ago, leaving plenty of upside before it reaches Panmure Gordon’s 730p 12-month price target.
The broker has retained its ‘buy’ recommendation for the stock, though it recognises that ‘Atkins and its consulting peers are still out of favour due to concerns about its Middle East exposure and general UK public sector demand trends.’
However, it believes the firm’s interim results ‘should remind investors of the quality of the Atkins operations,’ with revenue and margins held, despite tough markets, while the dividend has been increased.
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