Broker tips: Capita, AVEVA, Inmarsat

28th May 2012 12:15

UBS has upgraded its rating for outsourcing group Capita from neutral to buy on the back of improving trading momentum combined with a depressed valuation.The valuation is at an all-time low and, with the government bid pipeline acting as a near-term catalyst, UBS says that it presents a good buying opportunity. The broker has raised its target price for Capita from 700p to 725p.Merchant Securities reiterated its buy recommendation and 1,800p target price for AVEVA on Monday, saying that the engineering software group's full-year results were 'surprisingly strong' given its relatively conservative trading update last month.Revenues came in at £195.9m, 2.5% ahead of Merchant's £191.4m estimate. Basic earnings per share of 58.9p were 4.7% better than the 56.2p expected. "Having been hit by macro concerns, the shares look good value here."Jefferies has upgraded its rating for satellite communications group Inmarsat from hold to buy, saying that it now has greater visibility on the issues cited behind the profit warning in August last year."The downgrade cycle looks to have ended and further signs of top-line stabilisation should see further re-rating (Inmarsat's forward PE has halved from its peak, though recovered since profit warning)," the broker said in a research note on Monday morning.The target price for Inmarsat has been lifted from 425p to 550p.BC