Best of the Brokers

Goldman Sachs yesterday removed the bank from its pan-European buy list and downgraded it to a “neutral” rating, with a 12-month target price of 340p, down from 350p. The broker thinks Barclays’ latest operational targets contain a significant execution risk, and leave the bank with the lowest medium-term return on equity target of its peers.

UBS has cut the catering firm from “buy” to “neutral” and raised its 12-month target from 770p to 790p. The broker remains impressed with Compass’s growth in the past year, and has upgraded its earnings forecasts by a further two per cent on currency grounds. UBS also expects cash returns for shareholders to rise to 7.1 per cent of the firm’s market capitalisation by 2015.

Numis rates the publishing group “neutral” with a target of 1,320p ahead of full-year results on Monday. The broker will be focusing on Pearson’s outlook for the coming year, following a cautious tone in its pre-close update, and would like to see progress on the sale of Penguin. For now, Numis sees better value in rivals Reed and DMGT.