Citi rates the household goods maker “buy” with a target price of £40. The broker has cut its forecasts for the firm to reflect higher than expected Medicaid rebates, offsetting expected rises in organic growth. However, Citi continues to see the valuations for the firm as compelling, with the stock currently trading on 13.8 times 2012 earnings and a free cash flow yield of 7.9 per cent. It also expects raw material costs to start easing from mid-2012.
Goldman Sachs rates the casino owner “neutral” with a target price of 150p, implying an 18 per cent upside. The broker has trimmed its forecasts slightly following flat quarterly sales, and thinks the case for holding the shares is evenly balanced given uncertainty over Rank’s VAT reclaims. Goldman has discounted its sum-of-the-parts valuation for Rank by £59m to account for a possible negative ruling over its VAT claims.
MARKS & SPENCER
Nomura rates the retailer “buy” with a target price at 460p. Disappointing first-half results have led the broker to cut its full year profit estimates by 12 per cent, in view of a squeeze in consumer spending. But Nomura paints an optimistic view of M&S in the medium term, with improving online and international sales helping supplement sustainable UK profit growth. A close eye should be kept on costs when the firm reports on 8 November, it adds.