Date: Thursday 18 Jun 2015
LONDON (ShareCast) - Credit Suisse has lifted its target price for shares of Lloyds Banking Group from 72p to 80p to reflect strong revenues and lower impairments in the first quarter.
The Swiss broker maintained a 'neutral' rating on the stock, but said Lloyds remains its "preferred UK bank".
It said the lender is the best-positioned in the sector in terms of potential headwinds.
"Having said that, trading at c1.4x tangible net asset value/10.5x earnings for a c.14% return on tangible equity and 4.5% dividend yield in 2016, we think a large part of the positive momentum around capital return and full 'normalisation' of the shareholding is in the price. We remain 'neutral'," Credit Suisse said.
As for the government's remaining 18% stake in Lloyds, press reports have suggested the Treasury could fully sell down its holding within the next 12 months.
"The divestment process has been much discussed already - and hence not much potential for positive surprise here, we think," Credit Suisse said.
Jefferies downgraded Betfair to 'hold' from 'buy' but raised the price target to 2,400p from 2,050p.
The downgrade follows a share price rise of around 150% in the last year.
Jefferies noted that consensus estimates have risen by around 35% over the same period, meaning the shares have been significantly re-rated.
"We think the current Betfair share price fairly reflects management's track record of delivering better-than-expected results as well as future opportunities to further drive revenue and profit growth," said Jefferies.
Following the strong 2015 results, Jefferies upped its earnings before interest, tax, depreciation and amortisation estimates.
Jefferies lifted its 2016 EBIDA estimate to £111m from £106.4m, and 2017 to £121.7m from £117m.
Investec has retained a 'buy' rating on shares of Safestore, off the back of strong UK rental growth.
The broking firm put a price target of 305p on the stock but did not disclose earlier targets in a note to clients on Thursday.
Management's key initiatives over the past 18 months have fed through to sustained and improved trading, Investec said.
Cash tax earnings per share jumped 27% year on year, while Safestore noted UK rental growth had accelerated as new enquires rose 12% and net lets increased by 31% year on year.
"It is now a year since management introduced its new pricing policy in order to reverse the historical trend of declining average prices that resulted from older customers vacating at higher rents than those paid by new customers due to discounting.
"As Safestore passes the anniversary of this policy change, we expect the rate of Y/Y growth to slow," Investec added.
Exane BNP Paribas reiterated its neutral rating for milk firm Danone and slashed its forecasts for 2016 and 2017.
The broking firm said there was no sign of acceleration in the Chinese infant formula trade and reduced its price target by 6% to €60, from €64.
Exane also slashed its full-year earnings per share estimate for the French firm by 4% for 2015, 8% for 2016 and 9% for 2017.
Milk prices were "stubborn" analysts Jeff Stent and James Wyatt said in a note, and added that except for an immediate rebound in powder, milk prices are likely to remain benign for some time to come.
"Where powder prices tread, liquid milk prices typically follow c.6 months later. With this in mind, we note that Danone's predicted bounce-back in milk prices looks as if it will be pushed out somewhat," the analysts said.
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