Broker tips: G4S, Petrofac, Miners

10th Jul 2013 10:52

Goldman Sachs on Wednesday morning reiterated its 'conviction list sell' recommendation on shares of G4S ahead of the company's interim results on August 28th. Their investment thesis is based on the poor industry dynamics in security end-markets, resulting in low barriers to entry and limited pricing power creating margin pressures. Citigroup has named FTSE 100-listed Petrofac as one of its favoured names in the European oil services sector following its recent underperformance so far in 2013.The broker said that the sector is trading at its lowest price-to-earnings multiple relative the market since 2009. Petrofac's share price in particular has fallen by over 20% so far this year.Goldman Sachs has singled out Vedanta Resources and First Quantum Minerals (FQM) as 'buys', but has retained its cautious stance on the mining sector as a whole, cutting its target prices for most stocks under its coverage.In spite a potential buying opportunity caused by the steep sell-off so far this year - the STOXX Europe 600 Basic Resources index has fallen 31% year-to-date - Goldman said that its outlook remains unchanged: "negative earnings momentum and limited free cashflow (FCF) continue to take the shine off the sector".