BEST of the BROKERS

HALFORDS
UBS has upgraded the DIY retailer from “sell” to “neutral” but has trimmed its target price from 260p to 240p. The broker has lowered its 2013 forecasts after a grim outlook took the shine off Halfords’ recent results, but believes cost cutting measures will cushion the firm from further earnings downgrades. UBS sees some risk in management’s strategic overhaul, but thinks the long-term benefits will make up for the short-term earnings risk.

TESCO
Shore Capital rates the supermarket “hold” with a target price of 301p ahead of its first quarter results on Monday. The market is sceptical that Tesco can recover from its recent profit warning, the broker thinks, but adds that it is unlikely sales have “fallen off a cliff” since January. However, like for like sales figures are expected to be “materially” lower. Shore also expects to see chief executive Philip Clarke reveal more details of his turnaround plan for the UK business.

DIAGEO
Liberum Capital rates the drinks company “buy” with a 12-month target price of £20. If Diageo goes through with its £2bn - £2.3bn purchase of Cuervo tequila, the broker thinks the acquisition could add 50 basis points to sales growth and provide access to a new taste for the liquor in the United States. Liberum reckons a deal could be done by offering Diageo shares to Cuervo’s current owners.