Broker tips: Jupiter Fund, McCarthy & Stone, miners

11th Oct 2016 10:52

(ShareCast News) - Jupiter Fund Management got a boost on Tuesday as Barclays upgraded the stock to 'overweight' from 'equalweight' and lifted the price target to 525p from 420p to reflect a sector re-rating and earnings per share upgrades.The bank said Jupiter had "remarkably resilient" net inflows in the first half of 2016. It said that despite having the strongest weighting to equities within its assets under management mix at 80% - and around 25% AUM invested in European equities - most of its net inflows have been from the Dynamic/Strategic Bond range."These are benefitting from trends of UK investors' preference for bonds and hunt for yield," Barclays said."Overall, Jupiter's high-quality fund range and dividend income appeal (around 6% yield) stands out amongst peers in our opinion, but valuation at about 15x 2017 PE is at a discount to sector average of around 16x, which seems unjustified given superior flow momentum."The upgrade came as Barclays took a look at the broader European asset managers, reiterating its 'underweight' rating on both Aberdeen Asset Management and Ashmore, with new price targets of 300p from 270p and 325p from 270p, respectively.The bank kept Schroders at 'equalweight' and lifted the price target to 3,030p from 2,850p. UBS downgraded BHP Billiton to 'neutral' from 'buy' as it took a look at the mining sector, lifting the price target to 1,300p from 1,200p, saying the risk/reward was now balanced after a strong recovery in the share price.It noted the shares are up 63% year-to-date, outperforming Rio Tinto by 28%."In our opinion, the risk/reward is more balanced as we expect iron ore and coal prices to fall back over the next 3-6 months, and oil prices to be stable," the bank said.UBS said it still believes BHP is well positioned to generate robust free cash flow in a challenging price environment, with well-invested assets supported by a relatively attractive mix and savings from the new streamlined structure.The bank also downgraded South32 to 'neutral' from 'buy' on the near-term price outlook, but upped the price target to 155p from 130p.Again, it said the risk/reward is now more balanced following a share price rise of 194% year-to-date."The risk/reward is more balanced as we expect coal and manganese prices to fall back over the next three to six months with spot FCF yield to fall from around 15% currently to around 10% on the UBS price deck."In addition, it said the stronger rand was becoming a meaningful headwind.UBS upgraded Anglo American to 'neutral' from 'sell' and lifted the price target to 950p from 740p saying strong FCF and deleveraging reduces the risk of asset disposals at bottom of the cycle prices.Canaccord Genuity initiated coverage of McCarthy & Stone at 'buy' with a 185p price target, noting it is the dominant market leader with a strong brand in the private retirement housing market."We have a generally positive view of the UK house-building sector and believe that McCarthy & Stone offers an investment opportunity in a very attractive niche within the sector."The brokerage highlighted the group's clear strategy of delivering strong organic growth supported by a positive demographic backdrop. It said the medium-term demand outlook is favourable for the McCarthy to meet its strategic objectives, with an industry shortfall of supply that it is well positioned to help address in coming years."The balance sheet is relatively strong with minimal financial risk. While a more challenging macro backdrop over the coming twelve months may delay reaching its FY 2019 targets, we do expect the group to deliver good growth, returns and value over the medium term as it benefits from its strong position in a market with a very attractive long-term outlook."Canaccord said that following the re-rating of the shares, they now offer good medium-term value. It noted the shares now sit at discount to the IPO price of 180p and sector average valuation.It expects the company to deliver pre-tax profit of £105m in FY2016 and £111m in FY2017.