Broker tips: Lloyds, Rolls-Royce, Petrofac, Ladbrokes

14th Feb 2014 12:15

JPMorgan Cazenove has lifted its recommendation for Lloyds Banking Group from 'neutral' to 'overweight' saying that there is upside risk to new lowered forecasts following the bank's 2013 results.JPMorgan said the market's negative reaction to the results on Thursday "reflects a rebasing of expectations around legacy costs, net asset value (NAV) growth and capital return". However, these expectations "have now adjusted low enough to offer scope for positive surprise over the medium term, in our view", the broker said.Societe Generale has raised its view on Rolls-Royce from 'sell' to 'hold' despite the aerospace and defence group's gloomy guidance for 2014, saying that the stock is now trading at a substantial discount to peers after its recent sell-off."The Rolls-Royce model is not broken by any means, and the stock looks attractive at current levels, having dropped c20% since January, but lacks a short-term catalyst for a re-rating."Shares in Petrofac received a boost on Friday after Berenberg analysts highlighted the stock's "attractive" risk-reward profile, as they upgraded their rating from 'hold' to 'buy' and hiked their target price from 1,370p to 1,740p.They said that the stock is "cheap" on valuation terms, trading at just nine times earnings on consensus estimates for 2015 - "this implies an 11% discount to closest peer Saipem which we think is excessive".UBS has upgraded High Street bookmaker Ladbrokes from 'neutral' to 'buy', taking a positive stance following the pull-back in the stock seen over recent months."While we acknowledge concerns surrounding Digital execution and fixed-odds betting terminals (FOBT) regulation, given the recent share price pressure we upgrade the shares to 'buy'."BC