BEST OF THE BROKERS
RIO TINTO
Citi rates the mining major as a “buy” with a target price of £52, driven by a recovery in earnings from its diamonds and minerals (D&M) group combined with the leverage to iron ore prices, as the wave of supply struggles to reach markets. D&M’s contribution to the group had fallen from 30 per cent from 1996-2000 to a low of two per cent in 2010, but the recovery now means minor changes to the broker’s earnings estimates.
AEGON
Nomura says that the insurance group’s capital-light strategy should facilitate a fall in capital requirements in spite of strong earnings growth over the next five years. The broker thinks the strategy should allow Aegon to release at least €2bn of capital, while allowing earnings to grow by 29 per cent. Nomura reiterates its “buy” rating on the stock, and raises its target price from €8 to €8.50 as the group’s financial flexibility looks stronger.
CLARIANT
ING initiates its coverage of the Swiss chemicals company with a “hold” recommendation and a target price of CHF17 (£12.70), with analysis showing that the current share price already incorporates a significant improvement in earnings power going forward. The broker also sees a significant risk in buying the stock at current share price level by assuming a continued growth in margins for the coming years.