Broker tips: Int'l Power, AMEC, Rio Tinto

16th Apr 2012 11:33

GDF SUEZ's new bid for the remaining stake in utilities giant International Power (raised from 390p to 418p per share) is now close to Investec's expectations and the broker expects the offer to 'progress smoothly to its conclusions'.The broker does not foresee much regulatory risk: "Given that GDFS already owns 70% of IPR, we do not think that there will be too much of a problem with regulatory clearances, especially as the original IPR/GDFS deal went through the merger clearance process from August 2010 to February 2011," Anastasiou added.Investec has removed its buy rating for International Power and now recommends investors to hold the stock following the sweetened bid. The broker's target price is raised from 417p to 422p.Nomura has reiterated its buy recommendation and 1,240p target price for engineering and project management services outfit AMEC, hailing the firm's solid first quarter and strong outlook for future acquisitions.The broker brings attention to the Chief Executive's comments that the 2011 acquisitions are integrating well and says that similar comments were made following the MACTEC purchase in May. "We believe that the company will consider bolt-on acquisitions as well as transformational opportunities and expect something to materialise over the coming three to six months," the broker said.Credit Suisse has maintained its outperform rating for mining group Rio Tinto ahead of its first quarter production report on Tuesday."We see a strong investment case for Rio led by robust steel production and iron ore demand, possibility of a buyback with the interim results, asset divestments (Pacific Aluminium/Diamonds) and an eventual conclusion to its relationship with Ivanhoe that we expect to result in an attractive entry point to one of the world's largest copper mines," the broker said.The broker says that the stock is trading at seven times 2012 earnings and at a 20% discount to its net discounted cash-flow based valuation (4,650p).BC