Best of the brokers

Morgan Stanley has an “overweight” rating on the bank and has raised its target from 295p to 386p. It thinks Barclays could soon trade above its book value as focus turns to the prospect of the bank beating its cost of capital. Morgan Stanley expects a return on tangible equity of 13 per cent by 2015.

George O'Connor at Panmure Gordon has upgraded the IT company from “hold” to “buy”, with a target price of 480p. He believes UK margins have improved and there is a high likelihood of a special dividend following last week’s impressive trading update.

Nomura has maintained its “buy” rating and kept a target price of 2040p. It believes Diageo’s valuation is now attractive following a recent dip in share price, and said the firm’s strong balance sheet provided scope for future M&A activity. It added revenues would “accelerate” in 2013.