BEST OF THE BROKERS
NEXT
Morgan Stanley rates the fashion retailer as “overweight” with a new 2,930p target price, which implies a 25 per cent upside. The broker said that Next’s brand and customer proposition continued to resonate strongly with UK consumers. It believes the retailer will continue to generate strong cash flows for the foreseeable future and expects the group to continue to use this excess cash to buy back more shares.
LOGICA
Investec rates the software and computer services firm as “sell” and recommends a target price of 115p, citing concern for stocks exposed to generic IT demand with significant second half weighted forecasts. The broker said Logica fitted this profile and is relying on good volumes and pricing for a second half margin snap back. The broker has trimmed its 2011 pre-tax profit estimates by five per cent.
CAPITA
Nomura rates the transport group as a “buy” with a target price of 320p, and calculates that its year-on-year growth in both its US schoolbus and Spanish operations have improved sequentially in the second quarter. The broker sees momentum at the company as positive at the moment, with a successful bidding season underpinning forecasts for 2012. Nomura forecasts earnings per share of 28p for 2011, around eight per cent ahead of consensus.