Broker tips: Morrison, Betfair, HomeServe, Defence stocks

13th Jan 2014 12:12

Broker Shore Capital said it expects activist investors to continue to show interest in supermarket group Morrisons as reports suggested it was planning to sell part of its shop portfolio.Shore highlighted claims that US funds such as Elliott Associates had built a stake in Morrisons with a possible eye to forcing it to raise cash by selling stores. Shore said it could see scope for a "modest realisation" of cash from non-trading freehold assets and selective stores to cut net debt and highlight the implicit value of the business.Credit Suisse has downgraded its rating for online gambling group Betfair from 'outperform' to 'neutral', saying that a 'pause for breath' is needed after the stock's recent strong run."Last month's H1 underlying earnings were slightly ahead of expectations, providing further evidence that the turnaround is on track. However, the shares have performed strongly, and the inclusion of start-up losses related to the US and Italy, combined with lower pricing expectations, reduces our [...] target price to 1,085p (from 1,185p)."Numis Securities has downgraded its rating for home emergency repairs group HomeServe from 'add' to 'hold' after the company received a fine by the Financial Conduct Authority (FCA) over alleged sales and marketing mis-selling. Numis has lowered its price target for the shares from 295p to 286p, saying that the fine is "much larger than anticipated and is worth 9p off the price of the stock on a purely cash out basis".UBS has lifted its target prices for European aerospace and defence stocks, saying that the budget deal in the States reduces the uncertainty hanging over the sector.The deal "reduces near-term uncertainty and should allow companies with US defence exposure to manage their business better, rather than not knowing when and how deep potential cuts might be". The bank raised target prices for UK-listed defence groups after reducing the "uncertainty discount" that it applies to companies with 35-50% exposure to the US. BAE Systems is its top pick in the sector.BC