Date: Tuesday 28 Feb 2012
LONDON (ShareCast) - Nomura has downgraded its rating on drinks giant SABMiller, saying that while the long-term story still looks appealing, the shares have travelled well.
"We are downgrading our rating…after a strong run in the shares which leaves minimal upside to our revised target price (2,700p vs previous 2,600p). Although we still see a strong long-term growth story, we expect some consolidation of the shares at the current level," the broker said.
Nevertheless, the increase in the target price reflects the positive impact from the Russian deal with Anadolu Efes, in addition to a more positive foreign exchange movement.
While house-builder Persimmon's results appeared to be broadly in line with expectations, shares surged on Tuesday on new of a cash return worth 1.9bn pounds over the next nine and a half years, something that Peel Hunt has called a 'game-changer'.
"We cannot easily see this being funded by cash flow, so there will almost certainly be some dissolving of the balance sheet, which will make equity valuation more difficult," said Peel Hunt analyst Robin Hardy.
While the broker admits that valuing the equity today is tougher, "as the ultimate scale of business and balance sheet through this process is still unclear", it does see grounds to be more positive on the stock, and puts its rating under review.
UBS has raised its target price for materials science firm Cookson from 650p to 675p after a better-than-expected finish to the year.
Due to this outperformance, the broker has raised its estimates by 6% for the current year, hence the target price lift.
However, the broker maintained its neutral rating on the stock today, saying that growth could still be relatively disappointing in 2012, with Cookson's expectations ahead of its own.
"UBS is now bearish on the steel cycle (tough trends in China/Europe). Foundry might also slow as high Europe & truck exposure weighs. Fused Silica should get no worse and help profits in H2 though. Performance Materials sales are likely to face new product headwinds and our own data points to underlying PCB end-market weakness but it should see mix-driven profit growth."
BC
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