ASSOCIATED BRITISH FOODS
UBS upgrades the Primark owner to a “buy” and ups its target price on the stock by six per cent to 1200p, to reflect increased estimates. The broker makes no change to its full year guidance for 2011 of flattish earnings, but raises 2012 estimates by three per cent to put earning per share at an estimated 87p. UBS says double digit earnings growth next year is well underpinned by easy comparatives, and better pricing in its sugar business.
JP Morgan rates the corporate finance house as “overweight” with a target price of 682p, after it announced the sale of its 49.9 per cent stake in Mako, a market maker in exchange traded derivatives. The broker sees this as a sensible disposal, depsite the limited financial effect, and says it will get more attention than otherwise in the wake of the UBS derivatives trading loss. Mako contributed £2.6m of post-tax income to Close in the year to July 2011.
INTERCONTINENTAL HOTELS GROUP
Morgan Stanley rates the hotel group as “overweight” and lowers its target price to £14 from £16.50. IHG is the broker’s top pick among hotel stocks, as it favours the group’s fee-based model, large pipeline and commitment to sell real estate, as well as its discount compared to its US peers. Morgan Stanley reduces its revenue per available room for 2012 from + 6-8 per cent to +2 per cent, and drops its earnings per share forecast by 10 per cent.