Broker tips: Melrose, Ladbrokes, Cineworld

8th Oct 2013 12:16

Investec has upgraded its rating for industrial investment firm Melrose from 'add' to 'buy', saying it still sees upside potential following a slight underperformance.Dyett said that the company has shown through previous acquisitions that it is "capable of generating value from a range of businesses, using the many and varied tools at its disposal, and that investors should be well disposed to its proven model and track record". High Street bookie Ladbrokes was in the red on Tuesday morning after Jefferies downgraded its stance on the stock from 'buy' to 'hold, raising concerns about the online business and the future of the dividend.Jefferies said: "With no material online earnings and almost all profit derived from a low-growth (cash-generative) retail business, a low valuation multiple is appropriate. There is little prospect of an uplift until 3Q14E. With c11p of earnings in each of the next three years, it is easy to construct a valuation well below the current share price. We do see some hope, but uncertainty remains."Panmure Gordon said it expects a reduction in consensus forecasts for Cineworld after the Competition Commission (CC) ruled that three cinemas must be sold due to the acquisition of City Screen.Meanwhile, ahead of the next trading update later this month, the broker said: "we expect a downbeat assessment given that industry weekend box office revenues have fallen around 2% in the group's second-half trading period to date."BC