Friday August 8, 05:48 PM
Broker tips: Vodafone, Northern Foods, Kesa
LONDON (ShareCast) - Goldman Sachs (NYSE: GS - news) has lowered its rating on Vodafone (LSE: VOD.L
- news) to 'neutral' from 'buy' following a recent recovery in the mobile phone giant's value. Shares in Vodafone have bounced back somewhat since falling sharply following post first-quarter results, the broker noted. The results showed weaker than-expected revenue growth in Europe with Spain a particular risk, it noted. However, other operators such as Deutsche Telecom and France Telecom (Paris: FR0010560771 - news) have since issued more reassuring results, Goldman said. Northern Foods (LSE: NFDS.L - news) is undervalued despite the prospect of continued weak consumer spending in the UK, Goldman Sachs said as it raised its rating on the Goodfella's pizza maker to 'buy' from 'neutral'. The broker expects Northern Foods to be squeezed by input cost inflation and consumers' reluctance to accept price hikes, but still sees medium term value in the Leeds-based company. It raises its target price on the stock to 75p from 73p. Concerns over Kesa Electricals (LSE: KESA.L - news) ' exposure to weak consumer spending in the UK prompted Deutsche Bank (Frankfurt: DB9999 - news) to lower its rating on the Comet (COTN.SW - news) owner to 'hold' from 'buy'. Housing-related spending faces strong pressure, the broker said, adding that Kesa was highly operationally geared as a result of high capital spending and a 'very badly timed Spanish acquisition.' Kesa bought Menaje del Hogar in Spain, like Comet a retailer of electrical goods such as TVs and computers, last year. Deutsche Bank keeps its 180p target price on Kesa.
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