View From The City Brokers' Reports

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Sell Bradford & Bingley shares. That is the advice of Deutsche Bank this week. It says that B&B is the UK bank most dependent on the buy-to-let market, where slowing house price inflation is likely to quell the demand for new mortgages. Worse, this is an intensely competitive niche already, and B&B has been forced to accept lower profits on mortgages.

Deutsche Bank writes: "B&B is undertaking a cost reduction programme, but we believe there may be potential for additional cost cuts if a cost- to-income ratio similar to that of HBOS's retail bank is achieved. However, this potential is insufficient to justify the current market valuation." The shares are valued in line with the rest of the sector, despite what Deutsche sees as higher risks.

Some are holding B&B shares in the hope that it could fall prey to a takeover, but Deutsche doesn't see this as likely, particularly not from another quoted financial institution, which could pay more. Sell.


Shares in Speedy Hire went up by more than 50 per cent last year, and Killik & Co has just tipped the stock for 2005 as well. The company hires out tools, power generators and portable lavatories to the construction industry, from a network of more than 300 depots situated across the UK.

Historically, the business has grown by opening new outlets, but it is moving into a new three-year phase of broadening the products it hires, and in particular moving into the oil and gas industry. Killik thinks the shares will continue to rise to reflect the step up in profit growth. Buy.


Shares in Scottish & Newcastle, the historic brewing giant, were under pressure in the week as Cazenove, the blue-blooded broker, questioned the justification for the recent share price rally and played down the potential for merger and acquisition activity in the drinks sector.

S&N's shares already reflect the value that could be achieved by buying it and breaking it up, Cazenove thinks. On some financial measures it looks cheap, but this is justified by the lack of obvious strong growth in the beer markets in which it operates.