Broker tips: Barclays, ARM Holdings, GKN, Ocado, Savills

17th Jul 2015 11:50

(ShareCast News) - Investors' faith in the heir designate at Barclays may not be misplaced, quite the contrary, but in the short-term his plans for a "strategic acceleration" means earnings may be even weaker, Investec said.The analyst downgraded the bank's shares to 'sell' from 'hold' and lowered its price target on the stock to 265p from 270p."Barclays' relatively weak capital (CET1 ratio 10.6% at Q1) restricts its options, and any acceleration of non-core run-off would likely be negative for tNAV," Investec said.Elsewhere, Investec upgraded its rating for computer company ARM Holdings from 'hold' to 'buy' and said the stock was oversold.The brokerage maintained its price target of 1140p ahead of ARM's first half results expected next week.Investec analyst Julian Yates said the stock had underperformed the market by 12% in the last three months.RBC Capital Markets upgraded GKN to 'sector perform' from 'underperform' but trimmed its target price to 320p from 330p.It noted that GKN shares have underperformed sector peers year-to-date and are now trading at a relatively untesting multiple, even on the bank's consensus forecasts.It still considers GKN shares difficult to value owing to the company's mix of end markets with different cycles/valuations and the group's very significant defined benefit pension deficit.UBS cut its rating for Ocado, but raised its price target to 480p.The bank said it was supportive of the online grocery store's business model but the delay in announcing a new partner did not help validate the model."Deriving fair value on stock like Ocado with little in the way of short-term cash flow, profit or obvious global peers is more art than science," analyst Andrew Gwynn said.Gwynn added that Ocado was taking good steps to ensure barriers to entry and suggested scope for further expansion was probably limited.Savills got a boost after Credit Suisse initiated coverage of the stock with an 'outperform' rating and 1,141p price target and said it was the bank's preferred name in the UK estate agency sector.CS said the stock offered strong cyclical momentum and margin expansion.Savills is entering a unique period in which the UK prime residential, UK commercial and Hong Kong commercial real estate markets are simultaneously experiencing a period of cyclical improvement, said CS.It also noted that following its recent acquisition of Studley Inc, the group has the possibility to double its US commercial real estate business over the next three years.