BEST OF THE BROKERS
RENISHAW
Citi rates the global healthcare company as a “sell” with a target price of £14.92, after this week’s preliminary results revealed a three per cent consensus earnings miss. As the results were in line with the broker’s estimates, though, it views the miss a sign of miscommunication with investors rather than a symptom of weaker end markets. Citi says Renishaw stock has very limited revenue visibility, and history suggests earnings are deeply cyclical.
CAPITA
Morgan Stanley double upgrades Capita to “overweight” with a target price of 860p having turned positive on the outsourcing subsector after two years of caution. The broker says that timing when to buy in the business services sector is more important that selecting which stock to play, but sees greater upside potential at Capita and Carillion than rivals Serco and Babcock, as it sees potential medium-term downside in the latter’s numbers.
EASYJET
Deutsche Bank rates the budget airline as a “buy” and raises its target price from 480p to 490p after its third quarter results were significantly ahead of market expectations. The broker raises its full-year profit before tax forecast to £225m from £194m, within the new company guidance of £200-230m. Its full-year earnings per share forecast remains unchanged given the fuel headwind.