Broker tips: BT, BG Group, Burberry

18th Nov 2009 13:04

Broker Charles Stanley sees nothing much on the horizon to drive BT's share price over the medium term and has consequently switched its recommendation on the telecoms giant's shares from 'buy' to 'hold'.The broker has medium terms concerns over the assumptions underlying BT's pension fund deficit calculation, doubts over growth potential and also fears over the threat of migration of land-line customers to exclusive use of mobile services.'After a strong performance in recent months we think the shares are fairly valued at best,' the broker concludes. Yesterday's announcement of a joint venture agreement between Britain's oil and gas giant BG Group and Brazilian oil titan Petrobras has been given the thumbs up by Hanson Westhouse.The two oil industry behemoths are teaming up to develop a floating liquefied natural gas (FLNG) vessel as an additional option to commercialise the natural gas reserves in the pre-salt Santos Basin, offshore BrazilHanson Westhouse described the agreement as an 'innovative solution to the question of how to commercialise associated natural gas in the pre-salt Santos Basin,' adding that 'the amounts are not insignificant either.'At potentially 3m tons per annum of liquefied natural gas 'the capacity of this potential FLNG is a fifth of the size of the massive Gorgon project offshore Western Australia, the broker notes. 'Although this is a long term project, it demonstrates more of the potential upside for BG in Brazil. We maintain our BUY recommendation on the shares,' Hanson Westhouse concluded.Burberry is going out of fashion at Nomura Securities, which has downgraded the stock to 'neutral' following the luxury fashion group's results earlier this week.Although impressed with Burberry's strong interim results and the group's long term growth prospects, the broker thinks the shares are now fairly valued.'In our view Burberry deserves to trade on a premium to the sector and its own historical valuation of 15x [15 times annual earnings per share] for its strong ongoing momentum and significant upside potential to medium term margins,' Nomura analyst Allegra Perry opines. 'In order to see a further re-rating we believe the stock now needs a significant upgrade to estimates, which we view as unlikely in the near term,' Perry adds.Nomura has a price target for Burberry of 623p.