Broker tips: Bunzl, GKN, Vesuvius

19th Dec 2012 11:18

Panmure Gordon has trimmed its target price for distribution and outsourcing group Bunzl following the company's poorly-received pre-close trading update on Wednesday morning."We adjust our FY expectations marginally for foreign exchange, though we believe the shares remain a 'hold' and Bunzl one of the more consistent performers out there." The target price is cut from 1,051p to 1,023p.Nomura has initiated coverage of engineering group GKN with a 'neutral' rating and 245p target price, saying that it is "waiting for the green shoots of an EU car demand recovery"."An attractive valuation is what limits underperformance from here. We would turn more positive on GKN on signs of a recovery in EU car volumes with the focus on German and UK consumer indicators and a bottoming of France, Italy and Spain."Investec has expressed optimism regarding the long-term outlook for newly de-merged company Vesuvius, but has started with a 'hold' recommendation for the shares."Today's de-merger of the former Cookson Group presents an opportunity to leave behind an unfortunate legacy. The group was a serial equity fund-raiser - to finance acquisitions or survival - and it had a record of value destruction."In spite of the undoubted cyclicality of its markets, we believe that Vesuvius can break with the past and be managed prudently to generate robust cash flows, underpinning a good and progressive dividend."BC