Date: Wednesday 30 Jun 2010
Panmure Gordon has doffed its hat to AstraZeneca’s legal eagles after the drugs giant’s favourable verdict in a Delaware court on its CRESTOR patent.“The company’s impressive record in intellectual property litigation continues with a win on Crestor to accompany wins on Prilosec, Pulmicort respules, Seroquel and to an extent Nexium as well,” writes Panmure analyst Savvas Neophytou.
The generic drugs makers are almost certain to appeal against the decision but the presiding judge, Joseph Farnan, has handled a lot of patent cases and the broker does not expect him to have made any process errors that may invalidate the ruling.
The verdict has removed a “significant overhang” from the share price and as a result Panmure has upped its price target from 3300p to 3600p.
“AstraZeneca remains a conviction buy and we expect the market to start focusing on how the company emerges from its trough year 2012 which could result in significant upgrades to consensus,” Neophytou suggests.
Nomura Securities has an inkling that it might be revising upwards its earnings estimates for Smiths Group after an impressive two-day investors briefing last week by the technology firm.
“We not only found the presentations very informative in terms of a clear business strategy but we also left with an impression that the business heads of both Interconnect and Medical were very comfortable with the growth and margin targets set by the CEO (chief executive officer), Philip Bowman, in 2008,” said Nomura analyst Rahul Garg.
With that in mind, Garg said that “we believe that the risk to our FY11-13 [fiscal 2011-13] estimates and consensus lies on the upside rather than on the downside.”
The broker has a neutral stance on the stock over a 12-month horizon but remains “positively biased towards the stock from a long-term investment perspective.
Preliminary results from HMV were ahead of KBC Peel Hunt’s expectations and prompted the share price to rally but the near halving of the retailer’s share price suggests the market has no confidence in the company’s medium term prospects.
“HMV has long term challenges,” KBC analyst John Stevenson concedes. “However, management has set out a clear strategy to develop and diversify earnings, with PBT [profit before tax] underpinned by cost savings, the new Live Division, new product categories and Waterstones’ recovery,” Stevenson adds.On a price/earnings ratio of less than 4 the broker believes the shares remain fundamentally oversold, and has reiterated its “buy” recommendation and target price of 110p.
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