| CATEGORY: BROKER RECOMMENDATIONS SECTOR: GENERAL RETAILERS |
Broker tips: Next, Shire, Drax AB Foods, Gallaher, EMI |
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Mon 11 Sep 2006
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LONDON (SHARECAST) - Fashion retailer Next took a step back today as traders weighed up speculation of a 2,000p per share bid with caution ahead of interims this week.
Panmure Gordon remained cautious, repeating its “neutral” advice on the shares, saying there is nothing to back up the rumours and with little freehold property their is little opportunity to release cash.
Drug developer Shire was in a positive mood after Deutsche Bank stuck with its 'buy' advice on the group though the German broker trimmed 2007 EPS estimates and cut its price target to 1,080p from 1,095p.
JP Morgan also set an 'overweight' recommendation on Shire.
Lehman Brother has cut its advice on both Drax and National Grid to “equal-weight” from “overweight”.
The broker warned that valuations are beginning to look a little stretched but added that it does not view the sector negatively yet as there could be a period of M&A in the near future.
Merrill Lynch repeated its “buy” note on AB Foods following its first half results this morning.
The US broker said AB Foods’ discount clothing chain Primark achieved flat growth in the second half compared with a rise of some 12% a year earlier, which is likely to weigh on the shares.
Citigroup has stuck with its “strong sell” on cigarette manufacturer Gallaher arguing that the focus on the short term leaves the long term potential exposed.
The broker argued that Gallaher has moved to reduce investment in the second half for Rest-of-the-World countries and has concentrated on the UK business, which is due to be hit by next years smoking ban.
Music group EMI has been downgraded to “underweight” at Lehman Brothers on fears of weak first half sales.
The broker kept its price target of 320p, arguing that while EMI could see positive growth over the full year the shares are likely to be hit by nerves in the run-up.
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