Broker tips: BT, Weir, AVEVA

10th May 2012 11:26

Nomura has maintained its buy recommendation and 295p target price for telecoms titan BT, saying that while fourth-quarter revenues were soft, earnings, free cash flow and guidance were strong.The broker did note BT's decision not to rebase its dividend after announcing an 8.3p-a-share payout, up 12% on last year but below the high-end forecast of 11p. "There is a risk that investors feel short-changed from a low pay-out post the pension settlement and also that this undermines confidence in the pension settlement itself, but BT has polled key investors from whom the key demand has been affordability and growth - which should at least mark BT apart from other telecom peers," Nomura said.As for the valuation, the broker highlights that the stock is 9% off its recent highs and trades at a slight discount to the sector. Credit Suisse has slashed its target price for engineering group Weir to just 1,700p, from 2,350p previously, following this week's first-quarter statement."Drivers of our downgrade are solely Upstream Oil & Gas derived and reflect more cautious management guidance and our view that a pricing headwind will materialise for both pressure pumping OE and aftermarket in 2013E," the broker said.However, Credit Suisse has maintained its outperform rating on the stock.Engineering software provider AVEVA was performing well on Thursday morning, helped by an upgrade by UBS from sell to neutral.The broker says that the stock is now trading at a 2012 EV/NOPAT multiple of 18.5 which "more reasonably balances the growth opportunities in Product Lifecycle Management (PLM) with the execution issues and margin drag that go with this expanding in this new market."Furthermore, UBS says that the premium to the PML sector ("29% on an EV/EBITDA basis over a simple average of Dassault, PTC and Autodesk") is warranted by the high returns on capital, cash-generation and recurring-revenue-based business model, as well as its exposure to attractive end-markets.BC