Broker tips: Pearson, Meggitt, Ophir Energy, Investec, FirstGroup

21st Mar 2014 11:41

Credit Suisse has lowered its target price for publishing group Pearson from 1,410p to 1,260p after last month's profit warning, but said that the downgrade cycle is now over as it maintained an 'outperform' rating on the stock.It said that 2014 will be a "trough year" for Pearson's earnings and expects a compound annual growth rate of at least 16% between 2014 and 2017, excluding restructuring costs. "We are particularly encouraged by the more upbeat outlook for 2015, which suggests the cyclical headwinds are set to abate, and remain confident that Pearson is well positioned for the transition to digital."UBS has upgraded its rating on aerospace, defence and energy engineer Meggitt from 'neutral' to 'buy', saying that the stock has been disproportionately hit after its recent underperformance."The stock is now trading at the bottom of the range of its commercial peers (both OE and aftermarket oriented, but especially versus its aftermarket peers), which we believe is overdone on both relative and absolute basis and the stock offers good value at these levels."Canaccord Genuity has lowered its target price for oil explorer Ophir Energy after the company ended drilling at its Padouk Deep-1 (PD) well in the Ntsina Block offshore Gabon with no significant hydrocarbon shows.The stock fell over 15% on Wednesday following the news. "The scale of the correction post the PD well result was in part related to the size and importance of the well in the company's overall 2014 drilling campaign, but we also think it marks a moment when the last of Ophir's exploration premium rating dissolved," Canaccord said.Numis Securities has upgraded its forecasts for Investec after the specialist banking group and asset manager reported an "improved performance" in its pre-close trading update this week."The business appears to have some positive momentum now and we believe Investec is one of the few significant recovery plays amongst the specialist UK lenders."Investec highlighted "speed bumps to look for" in FirstGroup's trading update next month, but has reiterated a 'buy' recommendation for transport firm."This is a turnaround story and hiccups, such as earnings volatility and execution risks, should be expected along the way. Yet, if management can get the business sorted out once and for all, this remains a cheap stock."BC