Broker tips: Defence and aero stocks, JD Sports, Greene King

8th Jun 2009 13:01

Goldman Sachs has been reviewing the aerospace and defence sector and foresees a tough time from 2011 onwards for companies with a large exposure to the UK and US defence markets, on expectations of a reduction in military operations in Iraq and Afghanistan.Goldman Sachs has downgraded defence stocks BAE Systems and Cobham from 'neutral' to 'sell' with the former seeing its price target cut to 330p from 400p.In contrast it has upgraded aero engine giant Rolls-Royce from 'sell' to 'neutral' and aerospace equipment and defence systems provider Meggitt from 'neutral' to 'buy'.Charles Stanley remains a buyer of JD Sports Fashion after the outfitter of choice for trendy, sporty teenagers posted a 1.7% rise in like for like sales growth in the period from 1 February to 30 May.The broker thinks the company's strong performance recently has not been matched by its share price, which has more than doubled in the past half year.With a price-earnings ratio of 5.5, the stock is just too cheap, Charles Stanley says. The broker has a 471p target price on the firm. With more than £200m in its coffers after a rights issue in April, brewer and pub operator Greene King is in a good position to start snapping up pubs from rivals, according to UBS.The broker, which has a 'buy' rating on Greene King, raised its price target to 480p from 470p.