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Broker Spotlight - Persimmon, Redrow, Gulf Keystone, UBM, ASOS

Builders Persimmon and Redrow both saw downgrades on Thursday, so did Gulf Keystone, but Intermediate Capital Group and UBM were marked up.
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Home builders Persimmon (LON:PSN) and Redrow (LON:RDW) both saw downgrades on the Thursday before Easter - a season traditionally seen as boom for house sellers and buyers.

The former was relegated to 'neutral' from ‘buy’ by UBS, after a “strong run” saw  Persimmon share price reach the Swiss Bank’s targets. Analyst Gregor Kuglitsch said strong free cash flow and dividends would support the share, but there was no longer sufficient upside.

Kuglitsch also lowers the price target to 1,640p from 1,725p previously, despite the fact returns of the Persimmon business are sector leading.

Citigroup, meanwhile, upped Redrow’s price target to 390p from 375p but the US broker clipped back the rating to 'neutral' from 'buy', saying the shares had enjoyed a very strong bounce recently.

"We have upgraded our estimates on the back of the recent announcement and strong start to the spring selling season. 

"While we see continued scope to grow over the medium term, we downgrade our rating to Neutral after a strong run with a slightly higher price target of 390p."

Interestingly, notes Citi, the group recently announced that it had sold ground rent portfolios in London for total cash of £10.2mln of which £8.3mln will be received in the current financial year and £1.9mln in the next financial year. 

Meanwhile, having reinstated a 'buy' recommendation for AIM-favourite Gulf Keystone Petroleum (LON:GKP) earlier this week City firm Cantor Fitzgerald has quite quickly given its price target a slight hair-cut, to 101p from 112p.

The broker noted that GKP will raise gross proceeds of around US$41mln through a conditional placing of 85.9mln new common shares at 32p/share - a 20% discount to previous close. 

"Proceeds will be used to strengthen the company’s financial position in the near term, whilst the previously announced review of longer term financing options, and potential corporate actions, continues, alongside the ongoing work to establish a regular payment cycle for past and future Shaikan production and payment of arrears," it said.

Elsewhere, the Kurdistan oil firm was in the papers as reports claimed this week’s departure of chairman Simon Murray was instigated to appease investors in the concurrent US$40mln share placing.

Speaking of financiers, Intermediate Capital Group (LON:ICP) – a provider of mezzanine loans to business - saw JP Morgan mark up its price target to 585p from 525p and repeat an 'overweight' call.

It is due to report 2015 results for the year to end March on May 20 this year.

"The period ended with most markets near their highs, which we believe gives a degree of comfort regarding one of the more volatile lines of the P&L (unrealised gains), and with a full product pipeline currently marketing we expect positive momentum in the Fund Management Company to continue," said JP Morgan.

Liberum, meanwhile, upgraded its target for UBM Plc (LON:UBM) to 700p from 620p.

After a turbulent few years on the share price front, UBM looks to be back on track, as one of the largest global events providers, said analyst Ian Whittaker.

The analyst said the firm had exposure to a secularly growing and structurally resilient space; the Advanstar acquisition has orientated its business more towards North America and reduced some of the concerns over its Chinese exposure; and a potential sale of PR Newswire would leave an events pure-play and potentially offer significant cash returns. 

Across the rest of the market there were a number of analyst write ups, with little in the way of upgrades or downgrades. ASOS (LON:ASC) is a notable feature after Wednesday’s investor pleasing results.


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