BEST OF THE BROKERS

HOME RETAIL GROUP
Nomura has downgraded its rating on Home Retail Group to “reduce”, citing its Argos business. The broker says Argos’ product and demographic problems outweigh its core competitive advantage. The Argos business model is not broken but falling margins, low growth and a lack of product emphasis, in the broker’s view, limit the attractiveness of the stock.

NOVARTIS
More cash and less equity seems in the interest of Novartis’ shareholders, says JP Morgan Cazenove, which reiterates an “overweight” rating on the pharmaceutical giant. The broker says more cash should give Novartis management some flexibility to increase its offer for Alcon minorities and views a merger agreement as a positive trigger for Novartis’ shares.

TULLOW OIL
Citigroup says confirmation of Owo as a major new oil field is a clear positive for Tullow Oil. The broker gives it a “buy” rating but notes expectations were high ahead of the announcement. Citigroup believes the issues surrounding Tullow’s Ugandan portfolio will be resolved in the near-term and views any associated weakness as an opportunity.