Broker tips: Miners, Schroders, Babcock

3rd Apr 2013 10:43

Credit Suisse made across-the-board target-price cuts in the mining sector on Wednesday, highlighting the impact of supply overhang on metals prices this year."Despite more restrained spending, 2013/14 will be a period of price discovery, as markets move into surplus and the sector lives through the over-spend of prior years. We see downside risk to prices in H213 and this remains a challenging investment backdrop in the short run."Rio Tinto remains the broker's preferred large-cap miner with a "clear path to delivering volumes and improving cash flows".Schroders was topping the FTSE 100 in early trading as Credit Suisse said it expects the fund manager to gain from positive net inflows into European equities. "The broadening out of inflows into areas such as European equities is broadly positive for a number of names under our coverage, particularly Henderson and Schroders," the broker said.The share price of Babcock International, the UK engineering supports services organisation, was relatively subdued on Wednesday morning despite an in-line trading statement, as Westhouse Securities downgraded the stock from 'add' to 'neutral'."[The shares] have risen by 14% since our initiation of coverage, and our discounted cash flow-based target price of 1,142p now shows only 4.0% upside to fair value, hence we downgrade our recommendation to 'neutral'."BC