Broker tips: IAG, Serco, Grafton, Tullett Prebon

9th May 2014 12:39

British Airways and Iberia owner IAG is 'clearly making progress', according to Hargreaves Lansdown Stockbrokers which said that reduced losses in the first quarter were better than forecast.Hargreaves said that hopes of a return to a payment of a dividend "are moving onto the agenda". It added: "For now, with the group's restructuring ongoing and the recovery in the global economy still broadly intact, analyst consensus opinion remains highly favourable in tone (strong buy)."UBS has cut its recommendation for Serco from 'neutral' to 'sell', saying that the stock's valuation does not reflect the uncertainty surrounding the outsourcing group's earnings."There is a restructuring story waiting to emerge at Serco, and management change can be a positive catalyst as we have seen previously at the likes of Rentokil or Filtrona, but in the short/medium-term we see the risk/reward as skewed to the downside."Investec has upgraded Grafton Group from 'add' to 'buy' after a "strong start to the year" by the builders merchant and DIY company."We continue to believe Grafton's premium rating is justified by its superior growth profile relative to peers," said Analyst Tom Holmes.Numis Securities said there was "yet more bad news" for Tullett Prebon shareholders on Friday after the interdealer broker announced a weak first quarter and said it would slash jobs."With the 7,000 redundancies in BarCap being a sign of the times things are expected to get worse before they get better as interdealer brokers suffer more when investment banks have fewer staff than when investment banks profitability is under pressure," Numis said.BC