Date: Wednesday 28 Sep 2011
Peel Hunt has lowered its recommendation on on Domino's Pizza to "hold" from "buy" on valuation grounds, despite a strong trading update from the pizza deliverer.
Domino's Pizza posted like-for-like sales growth of 3.9%, up from 2.4% in the first half.
"We see the stock as a core leisure holding with significant further growth in the UK and an exciting opportunity in Germany," the broker said.
"However, the market has already responded with a 32% share price rise in the last three months."
It notes that the shares trade on about 27.1 times earnings, which it sees as "close to fair value."
It lifts its target price on Domino's to 510p from 500p.
RBS has lowered its target price on Aberdeen Asset Management to 190p from 254p after downgrading its earnings forecasts following the asset manager's latest trading update.
It predicts a pre-tax profit of £288.5m for the year to 30 September, which is within Aberdeen's range of £262m to £297m.
The broker maintains its "hold" recommendation on the firm following falls in the share price.
Aberdeen looks inexpensive on a price/earnings ratio of 10.7, RBS says, but it thinks that ongoing equity market volatility for the rest of the year means there is little scope for the share price to outperform the broader market or its peers.
It prefers the asset managers Man Group and Henderson, on which it has "buy" ratings.
Broker Alphaville has lift its recommendation on luxury goods group Burberry to "reduce" from "sell", pointing to its strong first quarter update.
The broker notes that the rich continue to favour luxury products despite their expense.
"The emerging markets are continuing to zoom with stores acquired in China contributing 20% to the retail business's underlying growth," Alphaville says.
It notes that the momentum has been maintained despite "bleak" economic news, but adds: "However, the recent collapse of equity markets if maintained could have an impact on luxury products' consumption."
It notes that the shares trade at about 25 times earnings, which causes it to "see the share valuation as being stretched."
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