Charles Stanley says strong free cash generation continues to support longer-term growth through increased R&D, targeted acquisitions and expansion in emerging markets. The broker thinks speculation about an eventual break-up of the group is likely to persist. Despite Smiths’ sluggish sales performance, operating margins improved to a 10-year high of 17.8 per cent. Charles Stanley says “hold”.
Numis points out that Tullett received a bid approach earlier this year. The broker says given the discount valuation and global market leading position we see the possibility that not only could a bid resurface, but it could well end up being contested. Terry Smith has repeatedly said he would sell the business if an offer that valued the business fairly was made. Numis says now is the time to buy the stock.
Jeffries International expects Sky to continue to post strong financials going into the first quarter of 2011 as the focus turns from subscriber growth to cross-selling into the existing base. It says to expect near term share performance to be correlated to developments on the News Corp bid. The broker said a bid of 760p-a-share is what it will take to persuade investors to part with their stock. It says “buy”.