Best of the Brokers for 23 May 2013

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ARM HOLDINGS
Espirito Santo reaffirms its “neutral” rating for the chip manufacturer with a target price of 1,068p. The firm’s new CEO, Simon Segars, has expressed a positive long-term outlook but the broker believes that most of the upside potential for the shares is already priced into the shares. Espirito Santo also points out that the price increases in the past month were driven mostly by a strong first quarter performance.

FIRSTGROUP
Morgan Stanley upgrades the transport company to “equal-weight” from “underweight” but reduces its price target to 176p from 195p. The broker believes that the firm’s £615m rights issue announced earlier this week reduces its credit rating risk, while the shares’ current value seem more reasonable. Morgan Stanley expects a slow operational turnaround but says there is also some room for outperformance.

KAZAKHMYS
UBS downgrades the copper mining firm to “neutral” from “buy” and reduces its price target to 385p from 465p. The driving factor for the downgrade is a lower than expected takeover bid for ENRC, a rival firm in which Kazakhmys owns a 26 per cent stake. ENRC rejected the 260p per share bid and UBS expects the next offer to be 300-350p, a significant decline on the previously estimated offer value.