BROKERWATCH Andritz, LogicaCMG among top picks in JP Morgan small/midcap review
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LONDON (Thomson Financial) - JP Morgan has added Andritz AG, LogicaCMG PLC and Premier Foods PLC to its top picks in a review of the small/mid-cap sector.
In a note today, the broker -- reiterating 'underweight' on the sector overall -- started Andritz, LogicaCMG and Premier Foods as 'overweight' with price targets of 55 eur, 185 pence and 250 pence respectively.
The broker said the sell-off in Pan-European Equities which has taken place since July has been particularly harsh on small/midcaps, ending their winning streak and delivering an average negative return of close to 13.2 pct.
Consequently, valuations have been reined-in, said the broker, which lists its top picks, all with 'overweight ratings', as Aker Kvaerner and ERG in the oil sector, Allianz among insurers, Bank of Cyprus, Bank of Piraeus, Erste Bank, Garanti and Unicredit for banks, BMW and Fiat in autos and parts, Carphone Warehouse, CosmOTE, Telenet and United Internet in telecoms and Carrefour and William Morrison among food retailers.
In aerospace and defence, EADS is its top pick, with E.ON and Veolia leading utilities, Givaudan heading food and cosmetics and Imperial Tobacco top pick in the tobacco sector.
Nestle leads for food, TUI Travel heads hotels and leisure, Vedanta is the preferred choice among miners, while Vinci leads in building and construction.
The broker said it views each stock as having high conviction 'now' recommendations into 2008, with its sector long trades on an average forward price/earnings ratio for 2008 of 13.9x.
JP Morgan added that the stocks have an average 2008 estimated earnings per share growth rate of 23.7 pct, with their price targets seeing average upside potential of 37.6 pct, it said.
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