BEST OF THE BROKERS

PENNON
JP Morgan Cazenove upgrades the water, sewerage and waste disposal group as “overweight” and lifts its target price by 24 per cent to 770p. The broker says the company’s waste division, Viridor, is set to increase earnings before tax by 67 per cent to March 2015, driven by six new energy-from-waste projects. At group level, following CKI’s approach for Northumbrian Water, the broker sees Pennon as an attractive takeover target.

FIRSTGROUP
Nomura rates the transport operator as “neutral” with a target price of 363p, reflecting a two per cent increase in its earnings-per-share forecast for 2012. The broker expects US dollar revenues to be down around three per cent in the first, representing a slight improvement on the second half year-on-year rate of decline. It also sees the UK bus business continuing to make steady progress, and UK rail following industry growth trends.

RIGHTMOVE
UBS rates the online estate agency as “neutral” with a target price of 1,250p ahead of its interim results statement on 3 August. The broker is looking for revenues of £46.4m compared to £39.2m in the first half of 2010, and expects management to be cautious on the market but upbeat on the company’s own prospects given its dominant position in its sector. The broker has upped forecasts by around two per cent, but sees an upside risk beyond 2012.