Brokers give UTV and IL&P stronger recommendation

SHARES in UTV and Irish Life & Permanent have been given stronger recommendations by brokers recently, based on similar arguments.

UTV is seen by Goodbody Stockbrokers as a group with high earnings potential going forward plus the good defensive qualities in a slower market. There has also been a second reiterated buy for IL&P.

Stuart Draper, of Dolmen Butler Briscoe, has re-endorsed the financial group's shares following close scrutiny of the Britannic fiasco in Britain, with the group indicating it may not pay dividends of bonuses this year. The news resulted in Britannic's share value plunging 50%.

Britannic has been too exposed to the bombed-out equity markets and has suffered the consequences. IL&P which, because it operates in the unit- linked fund sector, has been less affected by value write-downs in recent years.

Mr Draper points out that IL&P informed the markets recently it expects to boost after tax earnings by 10% this year and that it will grow its life business by 20%.

It is also well-capitalised and set to do well from the sale of its remaining subsidiaries in Britain which between them could generate cash of 150m.

That money will more than likely be used to buy back further shares.

Between June and September, IL&P spent 138m recovering buying back shares at prices 24% higher than current levels.

That figure of 13.87 points to a lot of upside in the shares in the coming months.

The Irish company is also capable of growing despite weak equity markets as it has already shown.

Its capital base is strong and it boosted its interim dividend 10% of the back of that strength.

When the markets do their sums Mr Draper reckons IL&P will benefit from a timely re-rating and punters are looking at a buy at a 24% discount to what the company paid to buy back the shares last year.

In the case of UTV, Goodbody notes its strong 10-year earnings track record, which it maintained during the much more difficult last two years.

Its dividend policy has also been positive with 13% annual growth recorded over the period, on top of two special dividend payments in 1995 and 1999 when stg20p and 35p were paid out by the all-Ireland media group which recently took over Lite FM in Dublin.

The brokers see the group as having better qualities than its peers and say it has the potential to climb to stg3.80 in the year ahead.

The group's purchase of Lite FM affords it the opportunity of giving its advertisers in the Republic greater market penetration adding to the station's attractiveness as an advertising outlet for firms in the Irish market, said the report.

UTV traded yesterday at stg£3.02.

As the outlook for the economy improves, the television group has the ability to invest for growth and capitalise on its existing strengths, according to Goodbody, which confirmed its earlier buy recommendation for the stock.