Broker tips: Friends Life Group, Rio Tinto, Drax

11th Aug 2014 13:00

Deutsche Bank has lowered its recommendation for Friends Life Group (FLG) from 'buy' to 'hold', saying it sees worse-than-expected underlying trends at the life assurance firm.The bank said that its previous 'buy' call had been due to "four main planks", two of which now appear weaker than originally assumed. "While overall cash flow is undoubtedly recovering, progress is nonetheless slower than we had hoped [...]. Separately, the benefits of any future share buy-backs have reduced as the share price has lifted."Canaccord Genuity has repeated its 'buy' rating for Rio Tinto on the back of the miner's strong free cash flows in the first half."After a period regaining control over its cash flows, RIO, like many large mining names is now moving towards the happy position of having surplus cash. This is over and above its reduced growth ambitions and need to cut its net debt position."The risk/reward balance at Drax has lost its attractions, according to UBS, which downgraded the stock from 'buy' to 'neutral' on Monday, causing shares in the power plant group to fall.Last week, the government won an appeal against granting Drax a subsidy to convert its second unit of its coal-fired power station to burn biomass. UBS said the news "has reduced the potential valuation upside for Drax".BC