BEST OF THE BROKERS
HALFORDS
Panmure Gordon has upgraded the car and bicycle parts retailer from “hold” to “buy” and raised its target price to 375p from 300p, despite downgrading its pre-tax profit forecasts by eight and 10 per cent respectively for the next two years. The upgrade is made on the basis that the broker expects Halfords to continue to generate enough free cash flow to pay its dividend, giving it a sustainable yield of 6.7 per cent.
CAPITA
Espirito Santo has downgraded the outsourcing company from “neutral” to “sell” and lowers its target price from 660p to 560p, after what it considers to be a disappointing start to 2012 for contract conversion. The broker sees the group’s prospect of securing the army recruitment contract as less positive than the market perceives, so factors greater caution into its forecasts, reducing organic growth expectation for 2012 from four to two per cent.
ASOS
JP Morgan has upgraded the online fashion retailer to “overweight” from “neutral” with a target price of 2,525p, seeing considerable opportunities for further growth over the next few years. The broker expects annual earnings per share growth of 20 per cent over three years, underpinned by both international potential and conservative UK assumptions, putting the company in the upper echelons of growth companies in the UK.