Broker tips: CRH, Shire, British Land

5th Jan 2012 17:57

Analysts at Credit Suisse have this morning downgraded their view on European building material companies to 'market-weight' from 'overweight.' Their opinion is that fundamentals and valuations are unattractive as we enter 2012. For that reason they have taken the following actions: downgraded Heidelberg Cement to underperform from outperform and CRH to underperform from neutral. This while maintaining their underperform rating on Lafarge and their neutral rating on Holcim and Saint Gobain. Wolseley is the only stock with an outperform rating among sector large caps.More specifically, these analysts highlight the fact that the stocks in their coverage universe are trading at a premium to historical multiples despite the current risk to earnings. Furthermore, growth in capacity expansions is expected to outpace that in demand (ex-China). As well, Credit Suisse takes issue with industry optimism over the outlook for pricing. Together with expected input price pressures the result should be further declines in those companies´ margins they think.In a research note on publicly traded European real estate companies dated January 4th analysts at Morgan Stanley wrote that they expect the net asset values of UK real estate investment trusts to decline 5% this year and another 6% in 2013. Despite the above its analysts upgraded shares of Land Securities, the UK´s largest real estate investment trust, and British Land to "neutral" due to what they consider to be their realistic pricing of assets. Great Portland Estates, for its part, was raised to "overweight" because of its favorable debt-to-equity ratio and its potential to deliver better returns from development.In a research note on the UK healthcare sector also published this morning analysts at Credit Suisse set out their views on the different names under their coverage.In the case of Shire they write that, "Shire remains our favoured name based on continued growth in the adult ADHD market and continued supply issues for competitor Sanofi in the enzyme replacement market. We continue to assume full generic Adderall XR competition in 2011 but acknowledge this may not appear until 2014+." As for GSK, they point out that it was 're-rated' in 2011 and now sits as the highest rated of the EU majors. In the opinion of Credit Suisse that may be appropriate given its position in the innovation/patent expiry cycle but leaves little room for pipeline or Advair disappointment in 2012.AB