Broker Tips: Petrofac, Entertainment One, Admiral, Sage, Debenhams, Elementis

25th Jun 2015 10:43

Petrofac shares rose 3.2% on Thursday after Nomura upgraded the stock to 'buy' from 'neutral' and raised the price target to 1,130p from 765p.The broker said the valuation was undemanding in the context of an incrementally positive Middle East outlook and improved risk/reward of Integrated Energy Solutions."We believe the downside risk of more charges in Integrated Energy Solutions (IES) is less than $15m-20m. Moreover, we think the receivables that are outstanding are manageable and the risks to the balance sheet are limited," said Nomura.The Japanese broker also pointed to the potential for a cash return of $1.9bn to shareholders through a harvesting of IES over the next 6 to 12 months.RBC Capital Markets has described Entertainment One as a "powerhouse with lots of momentum" as it gave the stock an 'outperform' rating.The analysts initiated coverage on the media company with a price target of 450p. Shares in company were trading down 0.03% on Thursday at 08:38 at 360.90p.RBC said the company is well positioned to deliver attractive returns and had a solid position in the filmed entertainment value chain.Citigroup downgraded Admiral to 'sell' from 'neutral' and cut the price target to 1,335p from 1,354p, saying it's a high-quality name, but fully valued."Admiral is undoubtedly a high-quality business and has been the benchmark for the UK motor sector for several years. As a result, Admiral consistently trades at a premium to peers," said the bank.However, it said it sees limited room for price-to-earnings expansion, given the growth profile is unlikely to return to historical levels, even assuming an upswing in UK motor rates.Shares in software company Sage pushed up 1.2% on Thursday as Investec upgraded the stock, following sharp losses in the previous session on the back of its Capital Markets Day.Investec raised the stock to 'hold' from 'sell' and lifted the price target to 535p from 360p."The capital markets day was positive but understated in terms of quantifying financial impact, leading a frothy share price to react in classic travel-and-arrive fashion," it said, adding that the new growth strategy looks sound in the near term.Analysts said department store Debenhams was "yet to convince" and described Thursday's trading update as "inconclusive."Investec analysts said that unlike others, they expected little profit uptick from Debenhams, and reiterated a 'sell' rating.However, Investec raised its price target from 66p to 88p, after the department store said it was on track to meet full-year gross profit targets.JPMorgan Cazenove downgraded Elementis to 'neutral' from 'overweight' and cut the price target to 275p from 313p following the company's profit warning on Wednesday.JPM said the downgrade reflects the likelihood of a period of relative weakness as the market awaits signs of a more stable trading environment.It seems the three end market pressures cited by Elementis - oil, China and Latin America - may be cyclical more than structural, said JPM. "While this is of little comfort to investors who had become inured to consistent growth from the restructured Elementis, it suggests that the scope for a trading recovery remains further down the line," it said.