Best of the Brokers for 17 May 2013

AZ ELECTRONICS
Morgan Stanley has started covering the speciality chemicals and parts maker with an “overweight” rating and a target price of 360p. The broker thinks AZ looks oversold following a recent profit warning, and that its growth drivers remain intact. Morgan Stanley thinks current trading levels at 13 times 2014 earnings appear cheap, and that AZ’s peers are trading around 15.5 times.

DAIRY CREST
UBS has a “neutral” rating and has raised its target price from 390p to 450p ahead of the dairy firm’s full-year results next Thursday. The broker has forecast a four per cent rise in second-half earnings, and believes management will predict growth in 2014 as the firm cuts costs and benefits from dairy price rises. However, a rise in farm-gate prices and competition from Unilever could keep a lid on growth.

WPP
Liberum Capital has issued a bullish note on the media giant, recommending investors “buy” in spite of the shares reaching a 13-year high. The broker thinks improving economic conditions will drive the stock further, even though WPP only generates 15 per cent of its revenues in the UK. Liberum also believes the group can beat revenue and margin forecasts in the next two years.