Broker tips: BT, Diageo, Segro

10th Dec 2009 11:52

Morgan Stanley has maintained its 'overweight' stance on BT and increased its price target to 190p from 175p previously.The broker says its rating is based on a clear path to £1.7bn Free Cash Flow To Equity (FCFE) before net pension top-ups by the 2012 full-year."This is necessarily a "show me" story - only via quarterly evidence of execution can the market be convinced that £1.7bn of pre net pension top-up FCFE is feasible," it said.JP Morgan has upped its price target on Diageo, but still prefers rival Pernod Ricard, which it thinks is better positioned in growth markets.The broker kept its 'neutral' rating on the UK spirits and Guinness group and lifted its target to 990p from 933p, but the French firm goes up to 'overweight' from 'neutral', with target up to €67 from €55."The fastest growth for premium spirits is still coming from emerging markets, notably in Asia. PR is far ahead of Diageo in the key growth markets of China and India, where it fully controls its own sales and distribution," it says.UBS expects UK property companies to produce higher returns than European firms over the coming year, with Segro its favourite pick. The broker has upgraded the industrial property specialist from 'hold' to 'buy' and included it on its most preferred list.UK REITs could produce total returns of 10% to 12% and the Continental European REITs returns of 8% to 10%. The UK's outperformance is expected to be driven by the greater potential for UK property values to snapback following the 44% decline from June 2007.For the sector overall, in the short term UBS believes NAV momentum is sufficient to maintain current ratings, but this would be vulnerable if it slowed appreciably or alternative investments became more attractive.