Best of the Brokers for 24 May 2013

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VODAFONE
Espirito Santo has a “buy” rating on the telecoms group and a fair value of 220p, up from 200p. The broker thinks partner Verizon is “closer than ever” to making a formal bid for Vodafone’s stake in their joint venture, and it applauds such a deal to free up cash for other investments across Europe. Espirito Santo sees the mooted $100bn price tag as undervaluing the synergies that would be available to Verizon.

KINGFISHER
Nomura has cut the owner of B&Q to “reduce” from “neutral” at a target price of 280p. The broker points out a potential downside risk for the shares following a recent rally, particularly given the firm’s weak outlook for the year. Nomura believes the firm will find it tough to recover from slow first quarter sales and anticipates the benefits of the Help to Buy housing scheme to be smaller than expected for the retailer.

TATE & LYLE
Investec reiterates its “hold” rating on the food ingredients company and a price target of 860p ahead of preliminary results on 30 May. The broker sees little short term risks despite a decline in exports to Mexico, and believes the share valuations to be fair. Given low capital costs and an unleveraged balance sheet, Investec would welcome M&A activity from the firm as a catalyst for the share price.