Broker tips: Lloyds, Aviva, Tesco

9th Aug 2013 11:22

Morgan Stanley has raised its rating for UK banking group Lloyds from 'equalweight' to 'overweight', saying that the company can benefit from a strong housing market while visibility on its payout improves."We upgrade Lloyds to OW as we are more bullish than most on the outlook for UK housing, while expecting a faster capital build and potential to re-rate as dividends are reinstated. We raise 2015 earnings per share by 10%, and Lloyds is now our UK top pick."Aviva was in focus on Friday morning as markets continue to digest the insurer's first-half results, with Bank of America Merrill Lynch lifting sentiment after upgrading the stock from 'neutral' to 'buy'.BofA thinks that cash-flow creation "holds the key to a re-rating" at Aviva as this will accelerate the pace of de-leveraging and the shareholder dividend.Tesco's potential deal to merge its Chinese operations with those of China Resources Enterprise (CRE) should help the supermarket giant's transformation into a more focused, cash-generative and higher-rated grocer, according to broker Jefferies.The broker maintained its 'buy' rating and 440p target price for the stock on Friday, saying that while there is no guarantee that the deal will complete, it is an "encouraging step" and will be strongly value-enhancing to Tesco. BC