Broker tips: Next, Serco, Asset managers

3rd Jan 2014 11:27

Nomura has upgraded its rating for Next from 'neutral' to 'buy' after a bullish trading update on Friday, saying that the company has shown 'consistent execution'. Its target price for the stock has been hiked from 5,380p to 6,500p."In our view, Next's strong delivery stems from its high hurdle rate, sensible planning assumptions and cost discipline, which have led it to its favoured position of 37% online sales participation and marketing leverage through its directory and credit offer. This combination is likely to continue to deliver," Nomura said.Panmure Gordon has chosen Serco as a key pick for 2014, saying that it expects the outsourcing company to be given a "clean bill of health" following a tough year. It has raised its target price for the stock from 535p to 560p."We think 2014E will be the earnings trough year, and there is scope for the company to rebuild its earnings and reputation during the course of the year. With 18% upside and a dividend yield of 3% on offer, we maintain a 'buy' recommendation on the shares and believe recent strength has been justified," said Analyst Mike Allen.Analysts at Barclays Capital have highlighted potential improving flows for UK asset managers, saying that stocks will benefit from a bullish outlook for 2014.The bank said that inflow rates are still "sub-trend" and have the potential to improve further. Meanwhile, the average price-to-earnings valuation multiple for asset managers remains at around 14-14.5, which "appear[s] mid-range with the potential to re-rate higher".BC