Broker tips: Melrose, AB Foods, Balfour Beatty

11th Jul 2013 11:04

UBS has raised its recommendation for industrial investment conglomerate Melrose from 'neutral' to 'buy', saying that the outlook looks bright after a series of recent (and upcoming) disposals."The Melrose 'buy/improve/sell' cycle has been a profitable model for shareholders. With the disposals of Truth and Marelli, alongside the planned sales of Crosby and Acco, we are seeing the final stage in action and will soon be looking out to the next acquisition," said UBS analyst Robbie Capp.Associated British Foods' third-quarter trading update was met with a positive reaction from markets on Thursday, with the stock receiving an extra boost by Panmure Gordon which upgraded its rating for the shares from 'hold' to 'buy'.Panmure highlighted the continued strong performance from its Primark chain, where the pipeline of store openings looks "particularly impressive". "We believe Primark is set for another decade of strong growth", the broker said.Investec has retained its 'sell' recommendation for infrastructure firm Balfour Beatty, saying that this year's second-half weighting leaves the company with a lot to do.Analyst Andrew Gibb said: "With a £50m profit shortfall in UK construction and a weaker Professional Services outturn, H2 will have to be an extremely buoyant trading period. Putting this into perspective, on our current estimates the group will have to deliver profit before tax of £162.5m (or 80%) of our full-year forecasts in the second-half. We see this as highly unlikely and see risk to numbers on the downside."BC