Berenberg downgrades Topps Tiles, Northgate and Oxford Instruments

21st Aug 2015 11:25

(ShareCast News) - Berenberg downgraded Topps Tiles, Northgate and Oxford Instruments as it reviewed its coverage of UK small and mid caps.It cut Topps Tiles to 'hold' from 'buy' with an unchanged price target of 175p following a period of very strong share price performance in the first half of 2015.Berenberg said it sees EBIT margins returning to through-cycle levels of 15%. "We are now at the mid-point in this recovery after already seeing an improvement in margin of close to 300 basis points- but there is another 300bp still to come," it said.However, the bank said that at current levels, the shares are already pricing this in.Berenberg cut Northgate to 'sell' from 'buy' and slashed its price target to 455p from 675p on the back of zero earnings growth forecast in the coming years and potential headwinds from lower residual values."Northgate has suffered FX headwinds, staff attrition and the loss of its chairman. It is now guiding to flat pre-tax profit for the next three years," said the bank.Finally, Berenberg downgraded its stance on Oxford Instruments to 'sell' from 'hold' and cut the price target to 800p from 950p due to a lack of visibility on end markets, FX headwinds and a loss of its competitive position in the industrial analysis division.The bank said: "With our updated numbers reflecting downgrades of 8-15% on EPS over the next three years, we believe visibility is unlikely to increase at any point in the coming months. We also feel that the next few years will contain a mixture of benign trading performance coupled with lacklustre margin progression."At 1138 BST, Topps Tiles shares were down 0.2% at 163.75p, Northgate was 1.9% weaker at 502p and Oxford Instruments was down 2.8% at 857.46p.