Broker tips: AstraZeneca, Serco, GKN

4th Jun 2013 11:03

Panmure Gordon has retained its 'hold' rating and 3,200p target price for biopharmaceuticals group AstraZeneca, saying that the news of the pull-out from fostamatinib should remind investors of the risks that the business carries."Today's news of another phase III product opportunity slipping away should not result in significant downgrades, but reminds investors that the stock carries significant pipeline execution risk," said analyst Savvas Neophytou.HSBC has retained its cautious view on UK outsourcers and has downgraded its rating for Serco from 'neutral' to 'underweight', highlighting the recent subdued activity of public-sector contract awards.Serco's downgrade comes after the stock has re-rated despite poor order income in the first quarter. HSBC also highlighted "heightened renegotiation risk" on 12% of its revenue base over the next 18 months.Shares in GKN were performing well on Tuesday morning after UBS lifted its target price for the stock from 275p to 350p and kept its 'buy' rating, saying the engineering group has "more than meets the eye".The broker said that GKN is well positioned after the acquisitions of Getrag and Volvo Aero which have transformed its Driveline and Aerospace divisions and strengthened its position in both markets. "We believe those changes, together with GKN's continued focus on efficient cost and cash management, have put GKN in a better position strategically and operationally," UBS said.