BEST OF THE BROKERS

BRITISH AMERICAN TOBACCO
Jefferies rates BAT a buy with £33.51 target price, as it believes its geographical exposure and market positions favour it over its main competitor Imperial Tobacco. Its strong emerging market bias will provide fast volume growth and pricing improvements, with a lower level of regulation. It also holds the number one position in more of its markets than Imperial, the broker said. It advises buying now before its first-half results boost its share price further.

GLAXOSMITHKLINE
Deutsche Bank rates GSK a hold with a £13.00 target price as its shares have reached a multi-year high and there is better value elsewhere in the sector. While GSK was the first big pharma company to exit its patent cliff and should return to sales and margin growth this year, the broker believes its mature pharma business is over-valued and downside risks from generic competition to its Advair and Relovair respiratory drugs are growing.

PRUDENTIAL
JP Morgan Cazenove rates the Pru underweight, with a £6.75 target price, as it believes the market values the insurer’s Asian business very highly, at 22 times earnings, which is at the top of its peer group. The broker expects the Pru’s pre-tax operating earnings in the first half of the year to fall by about five per cent year-on-year as it moderates the sales of variable annuities in its US business and as amortisation charges increase in that market.