Broker tips: Miners, Rentokil, Great Portland

6th Nov 2009 12:40

Miners have been put under the microscope by Standard & Poors Equity Research and Citigroup, with positive verdicts on BHP Billiton, Antofagasta and Rio Tinto.In a review of mid-cap miners Citigroup observes that the share price performance of Chilean copper miner Antofagasta has lagged the likes of Kazakhmys over the last six months.Citi has a 'buy' recommendation on the stock, which it identifies as the best investment option among copper miners, thanks to its low-risk production growth profile.For the sector as a whole, Citi says the rate at which metal prices are increasing is slowing down. The US bank still sees the large-caps in the sector as being better placed to thrive in the current economic environment and reiterates that its top pick is Rio Tinto.Meawnhile, Standard & Poors Equity Research has lifted its recommendation on sector leader BHP Billiton from 'hold' to 'buy'. Panmure Gordon must be puzzled by the negative share price reaction to the third quarter trading update by pest control group Rentokil Initial, which included a profit before tax figure that was 8% above the broker's forecast.The broker is expecting full-year earnings forecasts to be revised upwards and, pending the company conference call, it pencilled in revised figures of £155m for full year profit before tax, versus previous expectations of £136.9m.'We see the long term risk/reward profile looking very positive for this company, with significant potential for the bottom line to be improved through cost efficiencies before we consider cyclical upside,' the broker said. It currently has a 'hold' recommendation for the shares and a 100p target price.Stockbroker Charles Stanley is more bullish than Panmure Gordon, and has an 'accumulate' recommendation on the stock.'Today's update is another encouraging step in the recovery of the group and there are encouraging developments in the pipeline for this to continue into 2010,' reckons Charles Stanley analyst Tony Shepard.Property stocks were wanted Friday morning, with sentiment lifted by SEGRO's sale of the Great Western Industrial Park in Southall, West London, that it inherited in the Brixton Estates merger.JP Morgan (JPM) has added to the sector's positive vibe with an upgrade for mid-cap player Great Portland Estates, which it now rates as 'overweight' having previously been neutral on the stock.The primary reason for the rating change is the 15% fall in the share price since it peaked in mid-September; JPM notes that the stock has also underperformed its closest peer, Derwent, by 22% in the second half of the year and lagged the sector by 19% over the same period.'We believe the stock has been punished for degearing at the bottom of the direct market, and concern over the departure of Rob Noel, the highly regarded property director. We believe the underperformance is overdone,' JPM said.The company is due to release results next week when JPM expects Great Portland will probable become the first company since the property slump started to report a positive revaluation of its portfolio. 'We look for 221p net asset value [in next week's results] and we expect further details on its acquisition strategy, while a further deal cannot be ruled out,' the US bank said.