LONDON (ShareCast) - (ShareCast News) - Credit Suisse raised its price target on Robert Walters to 500p from 420p as it lifted earnings per share forecasts following the company's first-half results.
"We expect Robert Walters will continue to benefit from a combination of improving market confidence, rising consultant productivity and the ongoing expansion of its Resource Solutions operations," said the bank, which rates the stock at 'outperform'.

Credit Suisse raised its EPS estimates for 2015-2017 by 5-8%.

It noted that over the 12 years to 2014, the company's conversion ratio has been 11% lower than the average of the other professional staffing agencies. CS reckons that as more focus is placed on consultant and network efficiency, there is scope for this gap to close.

The bank now expects the business to grow earnings before interest, tax and amortisation at a 30% compound annual growth rate over the next three years and said this is not reflected in the share price.



Nomura continued to recommend clients cut back on cigarette maker Imperial Tobacco, taking a dim view of prospects for its core business and US market share pressure.

On the release of nine-month results from Imperial, Nomura was not terribly impressed by organic sales growth excluding forex of 2%, short of consensus forecasts of 2.6% due to volumes falling 3% versus the consensus estimate of 2%.

Just before the end of the third quarter, Imperial completed the £3.6bn US acquisition from merging Reynolds and Lorillard of key brands such as Winston, Salem and Kool cigarettes and Blu ecigarettes.

"Now the US deal is out of the way, we believe focus comes back to the core and the ability to deliver with the US assets," said Nomura. "We see Imperial falling short of expectations in both of these areas."

Acknowledging that it will take until later in the year before clear signs emerge of how the deal has affected US performance, the Japanese bank believes these results highlight the increasing pressures on market share Imperial is facing in its key markets, even with the support of management's 'migration programme' of converting popular local and regional favourites into global products.

"With investment also largely limited to costs savings from the brand migrations themselves, we believe these pressures will persist."

As it reiterated its 'reduce' rating and 2720p target price, Nomura analysts argued that the common argument that Imperial is cheap was wrong, "on a relative basis".

Its next-twelve-months p/e ratio has always traded at over a 20% discount to British American Tobacco, which Nomura rates a 'buy', "but this has now come in to around 17% but with a weaker growth profile on our estimates".

Meanwhile, "with little earnings growth likely over the long run" the share's support from the board's commitment to attractive dividends "only supports a price of around 2900p per share", well short of the current 3,250p level.

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