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Brokers’ Notes

Evolution Securities reiterated its “buy” stance and 50p target price for Booker Group (BOK) ahead of the cash and carry operator’s second quarter trading statement later this week. The broker believes the firm will again deliver growth ahead of the sector and at similar levels to the 2010 first quarter. A positive update should see the stock perform well in anticipation of 14th October interims, it added. Evolution believes the full potential of the UK business and Indian expansion are not currently appreciated by the market and therefore as growth is delivered the upside potential in the shares is significant. Booker shares rose 1.29p to 47.38p.

Seymour Pierce maintained its “hold” recommendation for Debenhams (DEB) ahead of the department stores group’s trading update this week. The broker expects the firm to confirm that its UK life-for-like sales run-rate has improved in the last ten weeks of its financial year. It also added that greater visibility on longer term growth opportunities is needed to drive a re-rating. In the short-term, the UK property downturn has impacted the firm’s new store pipeline and consumer demand is expected to remain subdued. Management therefore needs to prove there is sufficient momentum in the business to deliver further gross margin gains, Seymour concluded. Debenhams shares climbed 2.8p to 65.95p.

Shore Capital reiterated its “buy” stance for supermarket giant Tesco (TSCO). Although not confirmed by either party, news wires reported that Tesco and Aeon have been knocked out of the bidding for Carrefour’s South-East Asian stores. The broker however remains relaxed about this as it believes the firm has plenty else on the go. In this respect Shore notes the interview in The Daily Telegraph by forthcoming CEO Philip Clarke, where he signals great trust in UK CEO Richard Brasher to run the core business whilst he expects to retain strong international interest. Clarke also reveals progress with the trial of franchise convenience stores in Korea, showing an empathy with local competition concerns, something that Tesco has and continues to learn about in the UK. The shares moved 5.7p higher to 424.3p.

Daniel Stewart maintained its “buy” recommendation for the pharmaceutical company BTG (BGC) with an increased target price from 242p to 260p. The broker notes last week’s announcement that the group’s partner Ortho Biotech Research & Development, a unit of Cougar Biotechnology, has un-blinded a Phase III study of abiraterone acetate plus prednisone in patients with advanced metastatic prostate cancer. This comes on recommendation by the Independent Data Monitoring Committee (IDMC) after pre-specified interim analysis demonstrated a statistically significant improvement in overall survival and an acceptable safety profile. As a result of abiraterone’s progress, Daniel Stewart increased its estimate of the drug’s probability of being approved from 65% to 80%. BGC shares added 1 p to reach 228p.

Blue-Chips

Tullow Oil (TLW) shares flowed 6p higher to 1,240p as the gas and oil exploration firm confirmed that Owo, offshore Ghana, is a major new oil field after the Owo-1 exploration sidetrack extended the column of high quality light oil discovered. The Owo-1 well encountered 53 metres of net oil pay and the sidetrack, drilled 0.6 kilometres east of the Owo discovery well, encountered an additional 16 metres of net oil pay in the lower part of the same channel system. Beneath the Owo oil field, 13 metres of net condensate pay was also discovered, with an additional 6 metres of net gas pay logged in the deepest sand encountered. No water was stumbled upon in any of the hydrocarbon bearing reservoirs.

WPP’s (WPP) wholly-owned operating company G2, the brand activation agency, has agreed to acquire a majority stake in China-based shopper-marketing consultancy DPI. Founded in 1996, the consultancy specialises in shopper-based design, retail space design, merchandising systems design, experiential design and environmental design. The investment continues the firm’s strategy of developing its services in fast-growing and important markets and sectors. WPP shares finished 4p higher at 698.5p.

Associated British Foods (ABF) expects “very good progress” in full-year earnings ending 18th September, fuelled by growth at its sugar production units and increased sales at the Primark discount clothing chain. Primark sales and profit in the 12-months will be “well ahead” of last year, the company said, driven by store openings in Europe and “continued good growth” in the UK. Sales at outlets open at least a year have risen by 6%. The company added that is expects profit at the sugar unit to be “substantially ahead”, driven by growth in Europe and an improved performance in China. Associated shares eased back 16p to 1,072p.

Mid-Caps

PZ Cussons (PZC) shares rallied 15.9p to 345p subsequent to first-quarter trading meeting expectations as the household cleaning products manufacturer benefited from product launches such as Imperial Leather “Skin Kind” and a new formula Carex hand wash. The financial position of the company remains strong with cash generation during the period also in line with expectations. “We remain cautiously optimistic for the full year out-turn despite the global economic picture remaining uncertain and difficult trading conditions in some markets,” the group added.

Centamin Egypt (CEY) shares tumbled 15.3p to 168.8p on news the mining company has cut its production estimate for 2010 by as much as 20% due to machinery failures, lower grade ore and a drop in recoveries. The 2 billion pound firm, mining the Sukari gold deposit in Egypt, has lowered its full year guidance to between 160,000 and 170,000 ounces of gold, down from 200,000 ounces previously. Commenting on this, chairman Josef El-Raghy said, “Further adjustments to the production plant will be made throughout September, and we believe that the final quarter of 2010 will provide a more accurate demonstration of the normalised run rate of Sukari.”

Bluetooth chip specialist CSR (CSR) is using its cash pile of just less than 450 million dollars (292 million pounds) to buy back as much as 50 million dollars (32 million pounds) of shares. Bosses said they are “very confident” in the company’s investment case and ability to generate shareholder value. CSR shares jumped 35.2p to 351p.

Small Caps, AIM and PLUS

Mirada* (MIRA) shares rose 2.5p to 23.5p after the audiovisual content interaction specialist entered into a strategic partnership with Ericsson to integrate its Navi Electronic Programme Guide (EPG) with the communication giant’s Internet Protocol television (IPTV) middleware solution. As part of the agreement, Mirada’s Navi EPG will be included in Ericsson’s IPTV product catalogue and will be offered to customers worldwide. Commenting on this, José Luis Vázquez, Chief Executive of Mirada said: “Our Navi solution ensures that consumers with an Ericsson powered IPTV technology will have the best possible user interface.”

Texon Petroleum revealed that the seventh well on the Leighton Project in Texas, which Global Petroleum (GBP) has a 15% working interest, has begun to flow oil and gas. The well flowed at the gross rate of 350 barrels of oil equivalent per day from the Olmos reservoir. In a separate announcement, it was also publicized that the first Eagle Ford well in the Leighton Project, which Global has an 8% working interest, is expected to begin drilling in the next five to seven days. Global shares jumped 1.25p to 10.25p.

RAM Investment Group* (RAM) shares rose 0.375p to 4.625p on news that the holding company’s outdoor digital subsidiary, RAM Vision, has signed a total of 17 contracts with shopping malls across the UK. The four largest of these have a combined annual shopper footfall of 100 million. Executive chairman, Tim Baldwin, commented: “The substantial increase in our network, the strong endorsements implicit in our new property partner arrangements and our new technology tie-ups gives us a strong platform for significant revenue growth in 2011.”

NetDimensions (NETD) shares slipped 3.5p to 21p after the software company swung to a disappointing loss for the six months to the 30th June 2010. The company made good progress in supporting 2010 growth with a sales increase of 11% to 3.38 million dollars (2.19 million pounds) for the first half of the year. However, infrastructure investment expenses and an unrealised exchange loss led to a pre-tax loss of 0.26 million dollars (0.17 million pounds) compared to a 0.41 million dollars (0.27 million pounds) profit in the same period a year earlier. In spite of this, the board is confident that the company is “positioned to continue to expand.” Commenting on the results broker Arden Partners noted recent industry consolidation and speculated that the firm could be worth around 89p per share should it be acquired at similar levels to recently done deals.

Norkom Group (NORK) shares plunged 30.5p to 80p after the financial software provider warned that it expects revenues to fall by about 10% in the half-year ending 30th September 2010. In a trading update, the firm said that, as a result of elongated sales cycles together with the delay in new regulatory guidelines passing into law in Asia, revenues in the six-months will fall to 22 million Euros (18 million pounds). The decrease in revenue and an increased investment in sales and product development means that the group expects to report a bottom-end EBITDA of 1.2 million Euros (1 million pound) compared to the 4.5 million Euros (3.7 million pounds) reported in the same period a year earlier. Commenting on this, chief executive Paul Kerley said: “Norkom’s long-term prospects continue to remain posi tive.”

BATM Advanced Communications (BVC), the broadband enabling specialist, is ramping up production despite a fall in revenues from Original Equipment Manufacturer (OEM) sales. For the two month period to 31st, the company posted a 2.6% fall in total revenues to 18.6 million dollars (12 million pounds) compared with the equivalent period a year earlier driven by a decrease in OEM sales. In spite of this, substantial orders have been received from Tier 1 Customers in the US and higher demand for backhaul bandwidth, believed to be mainly due to the introduction of the Iphone4. The firm expects this demand to continue and is, therefore, ramping up production so deliveries could be accelerated in the fourth quarter. BATM shares dipped 0.75p to 24.5p.