BEST OF THE BROKERS
OCADO
UBS has downgraded the grocery delivery service from “buy” to “neutral” due to the stock’s recent outperformance, but raises its target price from 95p to 110p due to high peer group multiples. The broker says the business has yet to prove its credentials, and says consensus forecasts are still somewhat optimistic, especially for 2013. The 90 per cent rise in the shares this year has erased the upside to the broker’s previous target.
ITV
Deutsche Bank has downgraded the broadcaster from “buy” to “hold” as part of a move to a negative stance on the European television sector, saying the lesson of prior cycles is to hold onto broadcasting stocks in the early phases of a market rally. Since late December broadcasters are up 40 per cent, and the broker thinks we are now entering the underperformance phase. It also lowers its target price on the stock from 90p to 85p.
ESSAR ENERGY
Morgan Stanley has upgraded the India-focused energy company from “underweight” to “equal-weight” and lowered its price target from 230p to 160p, saying that it still sees some downside to the shares in the short term. The broker is waiting for clarity on a tax dispute with the Gujarat government which could lead to a default if the Supreme Court judgement is negative, and also wants guidance on coal supply for the Mahan power station.