BEST OF THE BROKERS
LADBROKES
UBS rates the betting group “buy” and has lifted its target price by 5p to 175p. The firm’s full year results were above forecasts, with strong growth in UK retail, which the broker says will continue this year thanks to double-digit growth at betting machines and a boost from Euro 2012. UBS expects to see Ladbrokes in an even stronger position next year once a switch to digital operations is complete, though the upgrade will dampen margins this year.
ANGLO AMERICAN
Citi has a “neutral” rating on the miner and a target price of £30. The broker has trimmed its earnings forecasts by three per cent in the wake of Anglo’s 2011 results, in light of rising copper and metallurgical coal costs, and could cut further given the strength of the South African rand. Citi also notes that the firm’s dividend is uncompetitive in the commodities sector, with yields of just 1.8 per cent last year.
CAPITA
JP Morgan rates the outsourcing group “overweight” and has a target price of 860p. The broker hopes to see a more upbeat outlook when the firm reports full year results tomorrow. JP Morgan thinks Capita’s revenue falls in the wake of the 2010 election and government spending cuts should start to level off soon. It notes that the firm has won £1.3bn worth of contracts in the first 10 months of 2011 – more than double the previous year’s haul.