Broker tips: Miners, United Utilities, AB Foods

16th Jan 2014 11:30

Mining stocks were performing well in London on Thursday morning after Citigroup lifted its 12-month stance on the sector from 'neutral' to 'bullish', representing its first positive outlook for the industry in three years. The bank has labelled BHP Billiton, Rio Tinto and Glencore Xstrata as its "key picks" in the sector. Citi said: "While we remain concerned about the potential long-term structural demand story for commodities in China, and we are cognisant of a potential seasonal slowdown in the first quarter of this year, our move to 'bullish' reflects better bottom-up fundamentals, particularly from the major miners. We would rather be too early than too late in making this call."Morgan Stanley has raised its rating for United Utilities from 'equalweight' to 'overweight', as part of its review into the UK water sector ahead of the Ofwat regulatory price review that will set prices for 2015-20."The 2014 regulatory review will clearly be tough but this is surely well known," the US bank said in a research report Thursday. "We expect clarity on allowed returns shortly, which should remove uncertainty, and we think fears of dividend cuts are overdone."United Utilities has been labelled as Morgan Stanley's top pick in the sector as it offers good value and has "superior upside" than other water companies. Panmure Gordon has hiked its target price for Associated British Foods (ABF), saying that a "sparkling" Christmas from Primark more than offsets weakness from its Sugar division and currency headwinds.The target has been lifted from 2,175p to 2,500p; however, a 'hold' rating for the stock has been maintained as Panmure believes "the shares are surely due a pause for breath" after a "remarkable run".BC