Buy LIG ahead of the merger closing date on 17 June, says Commerzbank, which adds that Seton Scholl (779p, not rated by Commerzbank) is almost equally cheap way into the new pounds 1.5bn healthcare company SSL International. Although the market is likely to remain cautious about LIG's US condoms and exam gloves businesses, Seton's management brings a much better track record to LIG's businesses.
Buy Merrydown (32.5p), says Teather & Greenwood, which highlights the cidermaker's strong management team and revitalised marketing strategy for its main brands. A recovery in national cider sales and possible acquisitions should make the stock an excellent investment opportunity with significant earnings growth.
Buy Chorion (27.25p), says Kyte Securities, which puts a 35p target on the shares in the next six months. Merchandising profits from Noddy in the US should flow through the next year while its bar and nightclub business - especially the Tiger Tiger bars - have exciting growth potential.
Sell NatWest (1427p), says Salomon Smith Barney, which cites three specific concerns over the bank. Profits are heavily reliant on dealing-related income, the cost initiatives at the core UK bank are unlikely to deliver sufficent efficiency gains and the current valuation is too rich for an organisation that has a poor record in delivering earnings growth. Although it has underperformed Barclays this year, the latter still offers better value, says Salomons.
Reduce AstraZeneca (2468p), says Sutherlands, which notes that US patents on the two key drugs driving the pharmaceutical's giants growth are set to expire in 2001. Losec and its cardiovascular drug Zestril will by then account for 50 per cent of AstraZeneca's growth, estimates the broker.
Northern Rock (520p) is set to underperform the market, says Goldman Sachs, which predicts 1999's profits are likely to be flat at about pounds 220m. Margins are still under pressure from new entrants such as Egg while the first half suffered from the impact of maturing Tessa. The bank's strategy of focusing on mortgages and savings and trying to grow assets as quickly as possible to get unit costs down has failed, and some might even argue this is the beginning of the end for mortgage banks, with consolidation more likely, adds Goldmans.Reuse content