Seymour Pierce has turned less positive on Compass Group, despite the contract caterer's fourth quarter numbers coming in ahead of expectations.
According to the broker's calculations, the company's £0.5bn budget to buy back shares
should be blown by the end of the year, at which point the questions becomes: "is there more to come?"
Although the net debt to equity ratio is still healthy, by the broker's reckoning, at less than 30%, the need to spend money to sort out Southern Europe may make the company more cautious over announcing a further buyback.
The group has announced a restructuring of its Southern Europe operations which should yield £95m of cost savings a year a couple of years down the line. The restructuring will lead to exceptional cash charge of £150m over two years and a non-cash exceptional charge of £195m.
The broker is making no change to its forecasts for the current financial year, which puts the shares on an earnings multiple of 15.5.
French quoted peer Sodexo, is on a prospective multiple of 19.2 for August 2012 falling to 17.4 in fiscal 2013 and currently yields of 2.7%, which is less than Compass's yield of 2.9%.
"We remain positive on Compass and stick with a 770p target price. However, further share progress may depend on more returns of capital, which could now be delayed. We move from Buy to ADD (Buy since 31 March 2009)," Lapwood concludes.
Panmure Gordon, however, is sticking with its "buy" recommendation, as its discounted cash-flow derived target price of 820p implies potential upside of around 15%.
Oriel Securities has also reiterated its "buy" recommendation, as has Espirito Santo Execution Noble but Numis Securities has downgraded the stock to "hold", while leaving its target price at 750p. Shore Capital is also a holder.
Westhouse Research, the house broker for US-focused shale oil development and production company Nighthawk Energy, said Thursday morning's poorly received full year results are of historical interest only.
The results cover the period of the transfer between the David Bramhill management and the new team under Stephen Gutteridge and therefore include significant legacy items, Westhouse's Peter Bassett and Andrew Matharu observe.
"The period is also before the results of the John Craig 6-2 drilled with the Gutteridge team as operator, which appears to be much more successful than any of the wells drilled under the operatorship of Running Foxes," they add.
"The initial flow results from the John Craig 6-2 encourages optimism over the current drilling programme under Nighthawk's operatorship. The recent Chesapeake asset sale to Shell and Chevron underlines the continuing interest of majors in shale plays," the broker said.
As one would expect of a house broker, Westhouse has a positive view of the shares and the future outlook for the company. It reiterated its "Strong Buy" recommendation with a target price of 10.7p per share.
If relative strength is one of your key investment metrics then packaging giant Rexam might be a stock for you, reckons merchant bank Beaufort International.
Kenneth Pio D'Mello, a senior analyst at the bank, said Rexam has been added to the Beaufort top relative strength buy list. The chart-gazer recommends an entry point of between 430p and 440p and to get out quick if the shares dive below 400p. In D'Mello's view, 420p is a support level while a reading of the runes suggests an exit point for short term traders of 490p.
Restructuring and cost reductions should improve operating profits, D'Mello suggests, in a nod of the head towards fundamental analysis. Those of you who put more stock in technical analysis might want to note than the moving average convergence-divergence indicator - which is designed to spot momentum changes and shows the relationship between two moving averages of prices - is positive, and the relative strength index is above 50.