Broker snap: Nomura downgrades RSA to neutral

24th Feb 2012 10:50

Nomura has downgraded insurance group RSA from buy to neutral given the lack of a catalyst in yesterday's full-year results."Our original investment thesis was predicated on RSA being a quality defensive stock. This still holds true, but we persisted with our buy in spite of the rally as we looked for the results to be a catalyst. Hence, given a lack of a catalyst until perhaps H1/FY results, we believe the stock will find it difficult to break out of its 105-115p trading range."Furthermore, the broker anticipates downgrades to earnings post results, meaning that the valuation no longer looks as compelling as it used to.Nomura has cut its earnings estimates for 2012 and 2013 by around 20% and the target price is slashed from 148p to 120p. The broker believes there is better value elsewhere in the sector, highlighting UK peers Admiral and Aviva, both rated a buy.BC