Broker tips: BG Group, AB Foods, Tate & Lyle

9th Sep 2013 11:03

Investec has placed its estimate for BG Group under review and maintained its negative stance on the stock after the natural gas firm scaled back its production guidance for next year."We expect to cut our forecasts by 3-4%. Despite strong earnings and cash flow growth, on our current forecasts BG is still trading on a 25% price-to-earnings premium versus the European sector in 2017E."Panmure Gordon has trimmed its price target for food, ingredients and retail group Associated British Foods (ABF) despite a confident full-year outlook from the firm on Monday.While the broker has cut its earnings forecasts for next year by 3.6% due to a reduction in EU sugar prices, the target price for ABG has been reduced by a lesser 1%, from 2,100p to 2,075p, "as the high PE earnings (Primark) have been upgraded, whilst the low PE earnings (Sugar) was the driver of the downgrade."Sugar and food group Tate & Lyle (T&L) was in the red on Monday morning after UBS downgraded the firm from 'neutral' to 'sell', saying that the share price is currently too expensive.The Swiss bank said that the stock's valuation is overly high and does not reflect that "sucralose prices continue to decline as 'generic' competitors improve product quality and access greater scale". It also highlighted that gross margins could fall and the group's dividend payout ratio remains low.BC