Broker snap: Utilities stocks continue to steady, says Seymour Pierce

21st Jan 2013 08:05

With results in the utilities sector not expected to grab many headlines over the next few weeks, Seymour Pierce has highlighted its best and worst picks for the category."Overall, we believe that the utilities sector continues to be a 'Steady Eddie', performing as it should in uncertain markets," analyst Angelos Anastasiou said on Monday morning."There should be a lot of commentary over the next few weeks, with all of the companies producing either IMS or final results, but we do not anticipate too much new news in these."The utilities sector outperformed the FTSE All-Share index by 4.7% in 2012, rising 10.5% in absolute terms.While Anastasiou noted that defensive sectors, such as utilities, are likely to underperform when the market "finally gains momentum", he said: "we remain confident that there is still some very good value there, backed up by solid yields".Seymour Pierce labels Centrica, Pennon and United Utilities as 'buys'. Centrica, in particular, is the cheapest stock in the sector, according to Anastasiou.In contrast, National Grid is a 'sell' as the analyst foresees a 10% dividend cut as likely in the near term, while Drax is labelled 'reduce' as he highlights "some uncertainties".BC