Broker tips: ARM, Kazakhmys, Britvic

22nd May 2013 11:29

Shares in chip designer ARM Holdings were under heavy selling pressure on Wednesday following the group's investor day this week, with a number of brokers choosing to remain cautious on the name given the stock's sky-high valuation after a strong rise so far this year.Liberum Capital, Morgan Stanley and Espirito Santo all agreed that the shares were too expensive and already pricing in a lot already. The latter said that "the lack of any incremental short-term positives implies that the shares could consolidate in the near term."UBS has downgraded its rating for Kazakhstan-focused miner Kazakhmys from 'buy' to 'neutral', saying that the prospects regarding a bid for fellow miner ENRC (in which it holds a large stake) have deteriorated.The initial proposal from ENRC's founding shareholders valued the company at 260p a share - structured as 175p in cash and 0.231 Kazakhmys shares per ENRC share - though this was rejected as being too low. "Even with a bump to the initial offer (where the cash portion would have to be increased) the deleveraging potential for Kazakhmys has been decreased," the broker said.Canaccord Genuity has kept its 'hold' rating and 380p target price for soft-drinks group Britvic despite a well-received first-half result, raising concerns ahead of its potential merger with sector peer AG Barr.Britvic still appears supportive of the merger however the broker said that a key risk will be an attempt to renegotiate the terms which could "scupper the deal entirely". "With the shares trading on 16 times 2013 earnings [...] versus the long-term average of 11 times earnings [...], we see material downside risk were AG Barr to walk away."