UBS has cut its rating on the chip designer from “neutral” to “sell” and slashed its target price from 450p to 260p after a profit warning last week. The broker thinks Imagination will struggle to meet consensus forecasts over the next year, with pressure coming from growing competition, slowing royalty growth and the integration of MIPS. UBS has cut its earnings forecasts by 43 per cent for this year.
Morgan Stanley has started covering the newly-merged mining group with an “equal-weight” rating and a price target of 350p. The broker thinks the firm can outperform its peers on growth on returns, and has a forecast of 10 per cent earnings growth per year through to 2015. Risks to the share price include swings in commodity values and competition on the marketing side of the business, it adds.
Panmure Gordon keeps its “buy” rating and 506p target price ahead of half-year figures due on 13 May. The broker expects to see a strong operational performance that will help the firm catch up on the output it lost at the end of last year. Panmure is forecasting half-year revenues of $713m and pre-tax losses of $22m, helped in part by a favourable rand exchange rate.