Broker tips: IMI, Prudential, African Barrick Gold

19th Apr 2012 11:28

Jefferies has raised its recommendation for engineering group IMI from hold to buy, saying that while the group isn't exactly geared for high growth, it does provide high returns."IMI is a curate's egg of a stock in some respects. A conglomerate with five divisions, it seldom fires on all cylinders and is by no means a high growth business (in terms of sales or earnings), but RoS [return on sales] and ROCE [return on capital employed] are high and the shares are good value, we believe," said analyst Andy Douglas.The target price is hiked from 840p to 1,150p.UBS has reiterated its buy rating for insurance group Prudential, saying its division Prudential Corporation Asia (PCA) compares favourably to pan-Asian life insurance rival AIA due to its structural advantages.The Swiss broker says that PCA's exposure to Indonesia should drive returns in the medium term, while its less mature book implies structural higher ROEVs (return on enterprise values) and more rapid profit growth in the longer term. "A stronger bancassurance platform and richer product mix have enabled PCA to grow its top line more rapidly than AIA while expanding margins," UBS said."Pru is trading in line with UK peers using traditional metrics, which is anomalous given its Asian exposure." UBS raises its target price from 800p to 875p.Shares in African Barrick Gold were under pressure on Thursday with Investec slashing its target price on the stock by 28 per cent following some weak first-quarter results."We had expected ABG to deliver a weak 1Q12 result and it did not disappoint," Investec said in a research note. The target price has been cut from 562p to 404p; a hold rating has been maintained.BC