BEST OF THE BROKERS

BURBERRY
UBS rates the fashion brand “neutral” with a 12-month target price of £12.50, 200p lower than its previous target after the broker examined Burberry’s margins and stripped out a potential premium from M&A activity. UBS expects costs to moderate the firm’s operating margins for the next two to three years, but thinks the firm will be back to faster growth by 2015-16.

GLENCORE
Nomura rates the commodities group “reduce” and has a target price of 450p. The broker sees Glencore as expensive compared to its peers, despite its lower asset quality and geopolitical risks. While Nomura expects the firm to make more opportunistic acquisitions, with bigger deals possibly requiring a capital raising, it does not see a takeover of Xstrata as likely in the short-term. It also notes Glencore’s highly-leveraged balance sheet.

INVENSYS
Citigroup has upgraded the IT group from “neutral” to “buy” and has raised its target price by 10p to 235p. The broker sees a positive shift from the firm’s recent trading news in rail, and thinks Invensys’ poor share performance is due to fading M&A speculation, a lack of progress on its pensions buy-out and a bad wider market. Citi thinks the recent share price drop means there is only upside risk for the firm.