Best of the Brokers

CAPITA
Canaccord Genuity has downgraded the stock from “hold” to “sell”, with a target price of 650p. While Capita remains a “well-managed business”, says Canaccord, “its investment case has diminished”. The broker warned that medium-term growth rates could be slow due to changing government initiatives. Investors reacted negatively to the downgrade yesterday as the stock closed down 0.88 per cent.

TATE & LYLE
Numis Securities believes chief executive Javed Ahmed’s strategy of “focus, fix, grow” has been well received by investors and that there is already evidence of major changes to the business culture. The broker says that while Tate & Lyle retains “some volatile and commoditised businesses”, it is impressed with the business and has initiated and “add” stance with a target price of 910p.

DIRECT LINE GROUP
Canaccord Genuity has initiated coverage of Direct Line Group following its successful flotation at the end of 2012. It has issued a “Buy” recommendation with a target price of 240p, citing the potential benefits of improved margins from the motor insurance business and “the net benefit from a £100m cost reduction programme”.