Broker tips: Cairn Energy, ITV, Ultra Electronics

15th Dec 2011 12:56

Despite Cairn Energy's "early Christmas present" of a $3.5bn special dividend, Investec stays cautious on the oil giant.However, analyst Angus McPhall said: "Given a lack of success at the drill-bit in Greenland, lower GDP growth rates in India, weakness in the Indian Rupee, and no apparent 'Plan B' for exploration in 2012, we maintain our cautious hold recommendation."The net asset value-based target price is reduced from 333p to 291p.Shares of ITV were on the up on Thursday after industry regulator Ofcom decided against referring the TV advertising market to the Competition Commission. Panmure Gordon has reiterated its buy rating on the terrestrial broadcaster.Ofcom launched a review in June into TV advertising to investigate if the current model was anti-competitive or not in customers' best interests. Now that this has been dropped, the news should help to remove the "regulatory discount on ITV" in the stock market, writes Panmure analyst Alex DeGroote.The broker, which recently turned a buyer on ITV on valuation grounds, gives a target price of 80p.UBS has downgraded its rating for high-tech defence firm Ultra Electronics from neutral to sell, saying the group is not immune to defence budget cuts.Around half of Ultra's revenues source from the US, the majority of which are with the Department of Defense and other security agencies, UBS said. Therefore, with the US 'supercommittee' failing to reach an agreement, the uncertainty surround defence stocks has increased.The broker speculates that this uncertainty could lead to contract delays hitting sales as early as next year. The target price is cut from 1,500p to 1,250p.BC