Broker tips: BG Group, Whitbread, Babcock

10th Sep 2013 11:38

Barclays has downgraded its rating for natural gas giant BG Group from 'overweight' to 'equalweight' after the company on Monday scaled back its production guidance for next year. Analysts said that "with growth pushed ever further out it is increasingly difficult to justify the premium multiple on which the stock trades". They explained that the shares trade at a 53% premium to the sector.Panmure Gordon has maintained its 'sell' recommendation for Whitbread after a "resilient" but slightly worse-than-expected second-quarter update from the cafe, restaurant and hotel group on Tuesday. The broker said that even on its below-consensus estimates, the stock trades at 18.7 times prospective earnings (for the year ending February 2014) "which is too high in our view". Panmure explained that Whitbread's lofty valuation does not reflect its expected compound annual growth rate in earnings per share of just 7.4% over the next three years.Engineering support services group Babcock was making gains on Tuesday after JPMorgan Chase said that the stock remains its top pick in the European business services sector."Babcock's shares have been rather range-bound since peaking in July, we think due to the lack of news flow since the Q1 trading statement. However, we believe that the investor seminar on September 27th could act as a catalyst and may also be accompanied by commentary on H1 trading."BC