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Broker views: TalkTalk and Domino's

21 April 2017 15:55

Equity research analysts at HSBC have upgraded their recommendation on telecom group TalkTalk (LON:TALK) to buy from hold after reviewing Ofcom's WLA fibre price controls.

"The WLA review proposes cuts to a pair of the company's key input prices providing visibility on an improving cost base through to FY21, as well as a market that will focus on price competition rather than network investment.

"The company still needs to improve its underlying operating performance, but it is being given a huge boost by the regulator."

The bank boosted its target price to 250p per share (from 175p).

In the same UK telecoms note, HSBC reaffirmed its buy rating on BT (LON:BT.A), albeit cutting its target to 370p from 420p.

It said: "On the day Ofcom released its Consultation, we estimated a negative FY21 cash flow impact on BT of more than GBP300m pa."

Meanwhile, Peel Hunt reckons the recent weakness seen in the market for Domino's Pizza (LON:DOM) shares should be used as a buying opportunity.

The broker commented: "Domino's has generated a 23% PBT CAGR and a 25% earnings CAGR over the last 14 years.

"We believe the company's long-term investment case is intact, and offers increasing competitive advantages as well as the potential for forecast upgrades over the medium term."

Its target remained unchanged at 400p per share and the rating moved to buy from hold.

At 3:55pm:

(LON:DOM) Dominos Pizza Group PLC share price was +3.1p at 325.1p

(LON:TALK) TalkTalk Telecom Group PLC share price was +8.55p at 197.55p

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Related Company: TALK

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