Broker tips: BT, M&S, Rolls-Royce

24th May 2011 12:50

BT, the telecommunications titan, has had its rating upgraded by UBS after solid fourth quarter results. While underlying revenue declines matched previous quarters, the broker notes that underlying cost savings accelerated with strong savings in its core operations.Key performance indicators were "particularly impressive", according to UBS, which highlights slowing line lossed and high broadband additions.UBS's recommendation now stands at a 'buy', from 'neutral', while the target price is hiked from 200p to 230p.Matrix has cut its rating for Marks & Spencer (M&S) from a 'buy' to 'add', but highlight's the good gross-margin outlook for the retailing titan, and suggests to "pick up shares on any weakness."M&S delivered a "small beat" on a full year pre-tax profit level, with £714m surpassing Matrix's forecast of £711m, A dividend of 17p per share also beat the broker's prediction of 15.9p.The broker sees potential upside for the gross margin, as the group has been able to maintain its "pricing architecture" when others have been cutting prices/sacrificing margins. Also, as cotton prices look like they may have peaked, Matrix thinks that "pricing pressures should begin to ease." The target price stays at 407p.The share price of Rolls-Royce has now reached Credit Suisse's price target of 640p, and as such, the broker downgrades its rating on the aerospace and engine giant from 'outperform' to 'neutral'.Credit Suisse attributes other factors to the ratings change, such as less potential for upgrades as part of its sector growth analysis and recent reported Rolls-Royce engine incidents on the increase.The price target is left at 640p.