Broker tips: Capita, BHP Billiton, ARM Holdings, Renishaw

23rd Jul 2014 12:51

Investec said it sees momentum building at Capita after a "strong set of interims" from the outsourcing group, which revealed double-digit organic growth and operating margins."Whilst the current valuation is not compelling, it is equally difficult to ignore the strong momentum in this business, which sets it apart from its other outsourcing peers in terms of organic growth levels, operating margins and cash performance," Investec said. The broker has lifted its recommendation for the shares from 'hold' to 'add' and hiked its target price from 1,100p to 1,230p.Canaccord Genuity highlighted "strong volumes and more to come" at BHP Billiton after second-quarter production came in ahead of forecasts.However, the broker kept a 'hold' stance on the stock, saying that the current valuation is trading slightly above BHP's historic average. It maintained its 1,935p target price for the shares, representing downside from Tuesday's closing price of 2,054.5p.Barclays has maintained its 'overweight' position on chip designer ARM Holdings, saying it remains confident in the group's longer-term prospects despite a deeper-than-expected trough in royalty revenues in the second quarter.An expected return to positive forecast momentum in the second half and Barclays' ahead-of-consensus forecasts means the bank sees "good value" in ARM's shares, which are trading at 29 and 22 times estimated earnings for 2015 and 2016, respectively.A strong finish to the year by Renishaw prompted Numis Securities to upgrade its rating on the stock from 'hold' to 'add' on Wednesday after the engineering group beat forecasts with its annual results."Underlying revenue momentum continues moving in to its new financial year and its recent investment should help capture good growth opportunities aided by increasing global demand for manufacturing sophistication and automation," Numis said.BC