Broker tips: AVEVA, Home Retail, Debenhams

14th Jul 2014 12:11

Investec has repeated its 'buy' recommendation for engineering data and design IT systems group AVEVA, playing down concerns after the company said that full-year results will be weighted more towards the second half."There has been no material change in the demand backdrop since the [annual results in March], where growth in the core business was strong. This should give some comfort, but the second half-weighting comment due to deal timing could act as a modest dampener. However, this is due to deals that are becoming larger as customers are consuming more, which is a positive."UBS has lifted its target price for the shares of Argos and Homebase owner Home Retail from 230p to 240p, keeping its 'buy' stance on the stock despite the recent sell-off."Much of the derating seems to have been from the change in interest rate expectations, with the first rate rise now expected by UBS in Q4 2014, from Q2 2015. While some derating may be justified based on an increased risk to disposable incomes and the historical correlation, the flip side of higher rates is stronger sterling, which should drive stronger gross margins into 2015-16," the bank said.Numis Securities has upped its recommendation for department store chain Debenhams from 'reduce' to 'hold', saying it sees "limited downside" to the stock.Numis has been negative on the shares since the start of 2013 on the back of concerns with the pressure of the online shift, the unknown consumer impact of Debenhams' strategic changes and that 2014 will mark the fourth year of earnings decline in its UK business. "Nevertheless, trading on sub-nine times Aug-2015 earnings, we now see limited downside in the absence of further significant downgrades."BC