Panmure Gordon cuts broker’s stock to ‘hold’ from ‘buy’

Stockbroker Panmure Gordon has cut its rating on the stock of broker Jardine Lloyd Thompson (JLT) to 'hold' from 'buy' following ‘misplaced’ rumours that the company will be taken over.

Panmure Gordon analyst Barrie Cornes wrote in a research note that JLT shares had a very strong run at the end of 2010. The shares, which closed on January 4 at 622p, are up 30% in absolute terms over the last 12 months, he said.

While he views JLT positively, and expects it to hit Panmure Gordon’s 2010 profit target of 41.58p a share, Cornes attributes the recent share performance in part to misplaced speculation that JLT will receive a bid from one of its larger rivals – Marsh, Aon or Willis.

“We view such an acquisition as unlikely given the very long term key shareholding of 30% by Jardine Matheson,” Cornes wrote. He added: "Whilst you couldn’t rule it out, in our view, it seems extremely unlikely that Jardine Matheson would want to sell its stake while JLT continues to deliver a steady income stream.”

As such, Cornes said his firm would be maintaining its 625p a share price target.

JLT has been the subject of repeated takeover rumours. In May this year, the broker’s stock rose on speculation that Aon would bid for it. Then in October, Marsh was rumoured to be circling the firm. JLT itself has repeatedly dismissed the rumours as gossip.