Broker tips: Burberry, G4S, ARM

11th Sep 2012 11:28

Both Nomura and Seymour Pierce downgraded their ratings for British luxury brand Burberry on Tuesday morning after the company warned about a sales slowdown in the second quarter.Nomura lowered its recommendation from 'buy' to 'hold' and reduced its target price from 1,450p to 1,210p, saying: "Delivery on margin growth, merchandising initiatives and continued prospects for double-digit space at high returns are the reasons to own the shares long term, in our view. However, with very limited near-term visibility, we lower our rating."Meanwhile, Seymour Pierce has cut its rating from 'buy' to 'hold' in spite of its long-term view of Burberry as a growth story with significant geographical and product mix opportunities. "This news will obviously hit sentiment towards Burberry and the luxury sector and the shares are likely to underperform until there is better news on demand."Jefferies has reiterated its 'hold' rating and 275p target price for security giant G4S ahead of the firm's first reputation test since the contract issues with the Olympics hit the firm."The award of some UK prison outsourcing contracts next week will be G4S's first litmus test of post-Olympics reputational damage," the broker said on Tuesday morning.Jefferies reckons that the market will be disappointed with none or just one win, two would be more in line with expectations, while three to four would be "encouraging evidence that Olympics-related reputational issues have not impaired its growth potential."UBS has raised its target price for chip designer ARM Holdings from 645p to 750p and reiterated its 'buy' recommendation."We believe ARM is in an excellent position to leverage many key themes in the digitisation occurring all around us, with ongoing robust smart-phone and tablet growth making way over time for growth in non-traditional markets like networking, the 'internet of things' and PCs/servers," the broker said on Tuesday morning.BC