Broker tips: ARM, Whitbread, Premier Oil

LONDON (ShareCast) - Nomura has raised its target price from 570p to 580p for chip designer ARM Holdings (LSE: ARM.L - news) but maintained its neutral view of the stock, saying that while the fourth quarter is expected to be 'in-line', there is no real catalyst in the short-term. In regards to the fourth quarter statement, Nomura said that ARM's management is "likely to be upbeat on ARM's prospects of share gains in broadening end markets, which are unfortunately unlikely to get the market too excited," the broker said. "We expect to see some volatility in the stock but with no underlying direction unless further solid data points on any of the above emerge." However, in the long-term, the broker says its remains encouraged by the opportunities arising from notebooks and servers. However, visibility is still too poor to justify share gains beyond what the stock is effectively pricing, Nomura added. Credit Suisse (NYSEArca: CSMA - news) has cut its rating for hotel, restaurant and coffee shop group Whitbread (Other OTC: WTBCF.PK - news) from outperform to neutral, saying that downside risks on increasing. "We see risks rising principally for Premier Inn which leads us to assume a 2% FY13 RevPAR [revenue per available room] decline and leaves our EPS [earnings per share] estimates 7% below consensus." Upside risks from Whitbread's defensive characteristics include its asset backing and exposure to the London Olympics; but with just an 8% upside seen to its 1,818p target price, the broker thinks the risk/reward is now less compelling, hence the downgrade. UBS (NYSEArca: DJCI - news) has downgraded Premier Oil (LSE: PMO.L - news) from buy to neutral, saying that while the outlook remains positive, the valuation appears stretched. "We now have an improved outlook over Premier (BSE: PREMIER.BO - news) 's near-term operations and production ramp up, which the market appears to be pricing in. While things are on track operationally, we see relatively limited upside from a valuation perspective," the broker said. Nevertheless, UBS says that the company's 2011 exit rate of 60,000 barrels per day "gives us confidence that it will be able to meet its 2012 target of 60-65kbpd with the ramp-up of Gajah Baru and Chim Sao (which is performing ahead of expectations), plus the start-up of Huntingdon." A 430p target price is maintained. BC