Broker tips: Aveva, SABMiller, Sports Direct

21st Jul 2015 11:28

(ShareCast News) - UBS raised its price target on Aveva to 2,600p from 2,210p following news that the company has agreed a reverse takeover by Schneider Electric.It said the proposed deal looks sensible and there should be cross-selling opportunities created, although it expects cost saving opportunities to be modest."While FY 2016 is likely to be a tough year for both Aveva and Schneider Software, if we assume 5% growth in FY 2017 for the pro-forma business and some margin expansion (200 basis points) as a result of cost efficiencies, we can anticipate a business with an EBITA of nearly £150m, compared with £64m in our current model," the bank said.Shares in SABMiller were buoyant after Nomura upgraded the stock to 'buy' from 'neutral' and raised the target price to 4,000p from 3,000p.It said that following downgrades to recent guidance on LatAm and Africa, expectations for near-term margins are low and there is scope for a positive surprise.Nomura estimates full-year 2016 group earnings before interest, tax and amortisation margin expansion of 50 basis points from geographical mix benefits.The bank said SABMiller's strong balance sheet offers debt funded acquisition firepower of $26bn on its estimates, adding that M&A momentum both in beer and soft drinks could return with the appointment of a new CFO.Despite a higher price target being set by Goldman Sachs, Sports Direct shares were down slightly on Tuesday. Analysts at Goldman nudged their 12-month target to offer 25% upside due to the retailer's recent share underperformance and a unique combination of plus-points.The FTSE 100 group's cost leadership, own-brand offering and clear alignment between shareholder and manager interests are a unique combination that makes it "one of the best-positioned retailers in our coverage", Goldman said as it reiterated its 'buy' rating.