Broker tips: Miners, Babcock, Compass...

27th Mar 2014 12:58

Jefferies has lowered its earnings forecasts and target prices across the UK-listed mining sector and cut its rating for Glencore Xstrata, recommending investors to stick with top picks Rio Tinto and BHP Billiton."Chinese demand growth for commodities is unlikely to accelerate without aggressive stimulus, and commodity prices should therefore remain rangebound near current levels," the broker said on Thursday.Panmure Gordon has retained its 'hold' recommendation and 1,350p target price for Babcock, highlighting the pros and cons of the engineering group's acquisition of helicopter services provider Avincis. Analysts Mike Allen and Paul Jones said that the deal, which values Avincis at 14 times operating profits, is "clearly not cheap". They added: "This business is also quite different to Babcock's current model, with short-term synergies unlikely to be found easily and will take time to execute."Investec has reiterated its 'buy' stance and 1,050p target price for catering giant Compass, saying that the stock remains a "key sector pick" after its second-quarter trading update.Meanwhile, Killik & Co believes Compass' profits will get tastier as it benefits from more outsourcing and growth in emerging markets. The broker, which retained its 'buy' recommendation on Compass, said the update was very reassuring and showed it was still trading well.Credit Suisse expects a "tough start to the year" for asset manager Aberdeen and has reduced its target price for the stock from 470p to 415p, keeping a 'neutral' rating.The bank admitted that the shares - trading at 11 times earnings for the 2015 calendar year - are "not expensive" but sees a lack of catalysts for the share price in the near term.UBS has lifted its target price for housebuilder Bellway from 1,930p to 2,030p and maintained a 'buy' rating, saying that the valuation discount to others in the sector is too wide."Bellway trades on an 18% discount to the sector on a price-to-tangible net asset value basis and an 8% discount to the sector on a price-to-earnings basis. We think this discount is unwarranted," said analysts Gregor Kuglitsch and Elliott Miley.BC