Broker tips: Centrica, Serco, Ultra Electronics

15th Nov 2013 11:31

Credit Suisse has cut its target price and reiterated its 'underperform' rating for British Gas owner Centrica, saying there are 'no major positives in sight' after the group's reduction in full-year forecasts.The bank said: "For us, the biggest concern is that 2014 organic growth has dropped to around zero. We reduce our 2014 earnings per share [forecast] c5%. We cut our target price to 300p (from 310p) and remain negative on valuation and growth."Jefferies has lowered its price target for government services group Serco after the firm's profit warning this week, but maintained its 'buy' rating, saying that the subsequent share-price drop was an 'overreaction'."Some investors threw in the towel yesterday and we think Serco's share price has overreacted to risks, particularly as there are signs of a warmer relationship between government and outsourcers." The broker said that UK government reports will be key to the firm's revenue outlook and "rehabilitation in the eyes of investors".Investec has cut its rating for Ultra Electronics from 'buy' to 'add' after the firm's gloomy third-quarter trading update.Investec analyst Chris Dyett said he reads management's comments "as slightly below [estimates] although we were modestly above consensus forecasts". However, Dyett said he was not surprised by the cuts to forecasts and continues to "back management to do the right things to drive long term shareholder value".BC