Broker tips: Aviva, ICAP, Miners

17th May 2012 11:07

Nomura has reiterated its buy recommendation and 600p target price for insurance group Aviva following its first-quarter results, saying that solvency ratios are stable and sales are solid."We believe that its focus will be on improving the capital strength of the group which is below its peer group average and is we think the main concern of investors. We expect disposals to be accelerated as the best method of improving the capital position, with the US likely to be one of the first candidates for disposal.""Although Aviva's solvency is below average, we think it offers considerable re-rating potential, trading on a 2012e price-to-earnings multiple of five and with a dividend yield of 10%."UBS has upgraded its rating for interdealer broker ICAP from sell to neutral following the group's full-year results announced yesterday."We upgrade ICAP to neutral as we see insufficient downside risk to earnings (other than a prolonged sovereign crisis) and expect the shares to start benefiting from valuation support as these have underperformed European exchanges by +20% over the past six months and are trading at three-year P/E+1 trough," the broker said.The broker has lifted its target price for the stock from 310p to 330p, after profits were "skewed towards higher quality earnings".Jefferies has reduced its target prices for miners under its coverage by around a tenth on average as macroeconomic concerns have increased in recent weeks.Nevertheless, Jefferies says that the FTSE 350 Mining Index having fallen by 14% in this month alone strengthens the value argument, "especially for shares of higher quality miners." The broker says that the recent weakness in the sector should be seen as a buying opportunity for BHP Billiton and Rio Tinto, in particular.BC