Date: Monday 18 Jun 2012
Despite last week's announcement of stimulus measures for UK banks, Nomura has maintained its 'neutral' rating on the sector, saying that the outlook for lenders is still difficult.
"While in the near term banks will be driven by risk appetite, sovereign risks and de-leveraging, we continue to see an extended period of weak fundamentals for UK and European banks, including sub-trend profitability and de-leveraging, which is negative for earnings and book value."
Nomura remains defensively positioned within the UK banking sector, preferring Standard Chartered and HSBC (both given 'buy' ratings) for their exposure to the emerging markets. Barclays is given a 'neutral' rating, while Lloyds and Royal Bank of Scotland are both labelled 'reduce'.
Jefferies has cut its target price for building products distributor SIG from 146p to 143p, but has maintained its 'buy' rating on the stock, saying that the new target still represents 47% upside to the current share price.
"A weakening euro and weather impacted trading in the first four months of the year lead us to reduce our forecasts for 2012 underlying operating profit by 5% [from £101m to £97m]. Exchange rate movements account for around one third of this decline," Jefferies said in a research note.
Investec has reiterated its 'buy' recommendation for bookmaker William Hill, highlighting the group's position as the market leader in online sports betting.
The broker says that the key drivers of market share gains in both sports and gaining have been: "product investment and enhancements; trading team expertise; exemplary marketing and customer retention; and relationships with stand-out product providers."
Based on revised discounted cash flow inputs relating to long-term group returns and risk weighting, Investec has raised its target price from 285p to 330p.
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