BEST OF THE BROKERS

ULTRA ELECTRONICS
Goldmans Sachs says the US defence contractor is a compelling growth story in cyber security and airport IT systems, and gives it a “buy” rating with a target price of 2,200p. The broker expects better trading to boost earnings per share over the next three years by one per cent, six per cent and nine per cent respectively, helped by a recent rally in the dollar and two cyber security acquisitions. It sees weaker growth in defence, the dollar and GDP as risks.

SABMILLER
Nomura rates the global brewer as a “buy” with a target price of 2600p, and says the recent Foster’s acquisition was a financially and strategically astute deal for the company. The broker expects the deal to be six per cent accretive in the first year, rising to eight per cent in the second year, but reduces its forecast for full year earnings in 2012 by 1.5 per cent to reflect recent currency headwinds and soft trading in North America and Europe.

DANONE
UBS rates the French food group as a “buy” with a target price of €55, down from €56.50. Danone will announce its third quarter sales on 18 October, and the broker expects sales growth of 10 per cent to €4.8bn, reflecting organic growth of six per cent – a sharp slowdown from the 8.1 per cent recorded in the first half. This reflects a normalisation of growth rates in water, and market share loss in the US yoghurt market.