One to watch: IPR a power of good

Published on Wednesday 10 February 2010 20:04

International Power 326p +5.8p Scotsman says BUY

INTERNATIONAL Power generates about 33,200 megawatts of power across 21 countries. It uses a variety of fuel types, including oil, gas, coal and renewable sources such as wind, water and solar, and also has closely-linked businesses, including wholesale production of fresh water through sea water desalination, open cast coal mining, gas transportation and renewable energy.

IPR's shares are a far cry from the 500p they hit in 2007. Electricity prices have softened and some of its key markets, such as those in the US, have been especially challenging. In the UK, on the other hand, it is doing well, and the group's other important and, indeed, developing interests in the Middle East, Australia and Asia, offer considerable promise. International Power should produce earnings in the current year of about 33p, a modest improvement on the previous trading period. It also offers a solid yield of about 4 per cent.

Recently, the company has been the subject of bid gossip, focussed on the French conglomerate, GDF-Suez. Talks collapsed last month, with IPR's management apparently considering that the proposed offer, which involved the transfer of assets rather than an outright bid, undervalued the company, which has stakes in more than 45 power stations.

However, GDF-Suez is reported to still be interested and may come back with revised terms. Be that as it may, IPR looks capable of progressing under its own steam as an independent power supplier, with a useful proportion of its revenue outside the regulatory authorities in the UK. In these challenging investment markets, IPR appears to have defensive characteristics but supported by longer-term growth prospects.

&#149 The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubt about the suitability of this company for your portfolio.

Wolfson

142.75p +5.5p

Broker says HOLD

SEYMOUR Pierce has downgraded its recommendation on Edinburgh-based Wolfson Microelectronics from "Under-perform" to "Hold".

The broker said that Wolfson's share price had "priced in much of the good news" that had come from the technology company's full-year results.

AstraZeneca

2,827p +11.5p

Broker says HOLD

SHARES in pharmaceuticals giant AstraZeneca "remain range bound" according to Citi.

The broker added: "The shares have given up almost all of the gains made in anticipation of the 4Q09 results given the hoped for medium term guidance uplift was not forthcoming and the 2010 guidance unsurprising."