Nomura has maintained its reduce rating and 1,130p target price on Pearson, despite the publishing giant raising earnings guidance on Thursday.

According to Nomura, "The organic growth rate we think is unlikely to much exceed 1% for FY11 (vs. our current 2% forecast), and tough conditions in North American education owing to budget shortages are likely to persist into 2012 and so organic growth in 2012 is likely to be flat to slightly down, in our view."

The broker maintains its negative view on the stock, noting that the valuation is high at a price-to-earnings (FY12E) multiple of 14.6

Investec says that the third quarter performance from Darty, KESA Electricals' key profit earner, was weaker than expected and has put pressure on the broker's forecasts, which are now placed under review.

The broker maintained its sell rating on the retailer but put its 65p target under review.

"With the core French market under pressure from a weakening economic backdrop and much of the rest of the empire's aggregate operating losses only serving to dilute the sum of the parts, we remain negative on the stock, notwithstanding the potentially imminent departure of the loss-making Comet division," Investec said.

Collins Stewart has reiterated its buy rating on online clothes seller ASOS after the firm said that third quarter sales jumped 46% year-on-year, underpinning full-year expectations.

"Against a challenging global economic backdrop, we are encouraged that ASOS has been able to maintain its high level of top-line sales growth. The business has a much more flexible model now that its Barnsley distribution centre is fully operational," said analyst Wayne Brown.

While the broker admits that the shares are not cheap on conventional metrics (trading at 33.5 times earnings for the year ending March 2012), "that is more than underpinned by high earnings per share growth rate".

BC

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