Broker snap: Savills gains after UBS upgrade

23rd Apr 2013 10:26

Savills was performing well on Tuesday morning after UBS upgraded its stance on the stock from 'neutral' to 'buy', saying it sees further upside from a global real-estate recovery.The broker said it has turned more positive on Savills following some near-term share price weakness - before Tuesday, the stock had fallen around 11% over the past month."We believe that Savills remains well placed to benefit from a continued recovery in global real estate markets. Specific sources of upside include: reversing losses in Continental Europe, cost control and further transaction volume growth," UBS said.The broker expects Savills to break even on the Continent in 2014 and for the pre-tax margin to increase by 140 basis points (from 2012-2014) to 8.9%. This drives its forecast for full diluted earnings per share to increase 30% to 44p in 2014.While the company is exposed to the cyclical transaction markets, UBS still believes it has "significant defensive attractions". Nevertheless, the two biggest risks are sustained weakness in Continental Europe and a larger-than-expected impact of government property policy measures in China and Hong Kong.A 610p target price for the shares was maintained.The stock was up 2.84% at 525.5p by 10:21 on Tuesday.BC