Broker tips: Friends Provident, LSE, Go Ahead
Shares in Friends Provident recovered some of yesterday's heavy losses after Panmure Gordon upgraded its recommendation on the insurer to 'buy' from 'hold'.
Panmure said that the almost 11% slide in Friends' share price - which came after JC Flowers said it will withdraw its proposed 150p a share offer unless Friends enters talks with the private equity group by 18 April - was over done.
Panmure noted that Friends' share price would bounce if talks with JC Flowers recommence, but would not lose much value if JC Flowers abandons all takeover attempts.
The broker keeps its 135p price target on Friends.
Morgan Stanley has cut its price target on London Stock Exchange, citing competition from new exchanges to be launched in the third quarter of 2008.
Noting that the US-Norwegian venture NASDAQ OMX, the trading platform Project Turquoise and BATS Europe are all scheduled to begin later this year, Morgan trimmed its price target on LSE by 29% to 1,060p.
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It remains 'underweight' on the LSE.
Goldman Sachs has upgraded its recommendation on the bus and rail operator Go Ahead Group to 'buy' from 'neutral' but cut its target price to 2,000p from 2,400p.
It said Go Ahead's current low valuation overestimated the risks to profitability from higher fuel costs in 2008/09.
The damage caused by Go Ahead's expected loss of the Southern rail franchise has also been overestimated, the broker said.
It added that the company may benefit in the next six months from the start of a UK-wide concessionary fare scheme, more people travelling by train and inflation-busting fare rises.
However, it also cut its 2008-2010 earnings per share estimates, citing the disposal of Go-Ahead West Midlands, the predicted loss of the Southern franchise and higher fuel costs.
