Stock Overweight Call: Gem TV with target price of 2.3 by JP Morgan!

JP Morgan said it has initiated coverage of UK-based Gems TV Holdings Ltd with an "overweight" recommendation and a 2.30 sgd target price due to the company's attractive growth valuations. "We estimate that Gems TV should generate an earnings per share compounded annual growth rate of 27 pct for the three years up to year to June 2009 on the back of new expansions into the home TV shopping markets in the US and Germany (from the current financial year)," JP Morgan analyst James Tan said in a note. He expects the US to be the next potential earnings driver for Gems TV. JP Morgan estimates the company will post a 35.1 mln usd net profit for the year to June 2007 from 28.8 mln the preceding year, and sees net profit further rising to 56.3 mln usd and 72.5 mln usd in the next two years. At 3.15 pm, Gems TV gained 0.14 sgd or 10.61 pct to 1.46 on strong volume of 36.84 mln shares.