Date: Thursday 20 Feb 2014
LONDON (ShareCast) - Despite a warning from BAE Systems that cuts in US military spending will slash profits by up to 10 per cent, Jefferies has rated the stock a 'buy' with a price target of 350p, stating that the company’s woes will be short-term as the firm’s US businesses “hit bottom” in 2014.
The stock sank sharply on Thursday after BAE’s guidance for this year’s results disappointed. "We do, however, have much greater clarity, an encouraging order backlog, a lower pension deficit and end-2013, net debt of £699m versus our forecast of £1.5bn. We believe it all amounts to a creditable, honourable draw," Jefferies told clients.
Investec has downgraded its rating for RBS from ‘hold’ to ‘sell’, recommending investors to short the stock ahead of the bank’s 2013 results due on February 27th.
“After the last RBS share price correction, we recommended taking profits/closing short positions,” said Analyst Ian Gordon, referring to a report he published on January 27th. “However, the shares have once again spiked by 8%, sharply outperforming the FTSE 100 and the rest of the UK banking sector. We detect some misplaced euphoria ahead of results,” he said.
BT is set to continue benefiting from several favourable long-term trends but the gap between consensus expectations for operating profits and those of analysts at Credit Suisse, has “closed materially” after the shares’ more than 80% rise since November 2012.
The main reason for the above is that the near-term potential for further cost cuts is now more fully reflected in the shares, although the company is believed to be able to continue to cut costs for the next six years no less. Hence the Swiss broker’s decision on Thursday to remove the stock from its ‘Focus list’, albeit while at the same time hiking its price target to 440p from 350p previously.
Numis has rated investment manager Rathbone Brothers a 'hold' as underlying pre-tax profits of £50.5m were exactly in line with the broker's estimate.
“We regard Rathbones as one of the quality names in the wealth management sector and thus we believe it merits a slight premium rating, due to its consistent net inflow record, consistent 30% operating margin and significant bias towards recurring fee income," Numis said. "On 19 times 2014 earnings per share, the rating already fully reflects the quality in our view."
BC
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