Newspaper article The Evening Standard (London, England)

Broker's Taste for Imps despite Talk of Cash Call

Newspaper article The Evening Standard (London, England)

Broker's Taste for Imps despite Talk of Cash Call

Article excerpt


THE prospect of a massive rights issue of between [pounds sterling]3 billion and [pounds sterling]5billion from Imperial Tobacco has done little to quell Credit Suisse's appetitefor its shares.

The broker points out that Imps' shares, up 15p at 2499p, have underperformedthose of main rival British American Tobacco by 10% so far this year on theback of BAT's stronger earnings momentum and the likelihood of a shareoverhang. It has raised its rating on Imps from neutral to outperform andjacked up its target from 2550p to 2750p.

Shares generally limped towards the end of the week, with a strong overnightperformance on Wall Street overnight offset by big falls in Asia this morning.The FTSE 100 index fell 37.4 points to 6233.4.

After a review of the pubs and restaurants sector, JPMorgan says news thatEnterprise Inns can qualify as a real estate investment trust (Reit) has causeda jump in shares across the sector.

The broker says the move by Enterprise, down 9 1 . 4 p at 489 3 . 4 p, andrival Punch Taverns , off 6 1 . 2 p at 616p, may be justified but it now thinksit will focus investors' minds back on fundamentals.

It has cut 2009 forecasts by between 5% and 8% to reflect a slower rebound fromthe smoking ban and cost pressures.

It doesn't expect competition to become easier until the fourth quarter, andurges investors to be selective.

Punch, rated overweight, remains JPMorgan's top pick following the Reit news.It has upgraded Greene King from neutral to overweight and Marston's fromunderweight to neutral. It has downgraded JD Wetherspoon , 3 1 . 2 p cheaper at312p, and The Restaurant Group , 1 3 . 4 p easier at 168p, from overweight toneutral. It remains cautious on Mitchells & Butlers.

DSGi marked time at 70p after HSBC cut its rating on the electrical retailerfrom overweight to neutral but increased its target by 5p to 75p.

Thomas Cook shrugged off a downgrade by Credit Suisse to post a rise of 3 1 . …

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