Broker tips: Randgold, Severn Trent, Morgan Crucible

30th Apr 2012 11:00

Nomura has downgraded its rating for gold miner Randgold Resources from neutral to reduce and cut its target price from 7,115p to 6,970p, saying that the recent sector 'de-rating' has left the stock exposed.Despite an increase in the group's exposure to political risk - given the military coup in Mali earlier this year - Randgold has only de-rated in line with the sector."In our view, over the medium term, as the Malian situation develops, we believe that Randgold's already premium 1.15 times spot price over net asset value (P/NAV) rating is unlikely to expand faster than other gold producers where we see more value and less unpriced political risk," the broker said.As part of its review of the utilities sector, Investec has downgraded its rating on water group Severn Trent from buy to hold and cut its target price from 1,718p to 1,664p.Investec says that the recent share price spike has been driven by bid speculation, something which it does not necessarily see as likely.While he believes that Severn Trent remains "well-placed for the medium term", Anastasiou highlights that the shares have risen by 13-14% since only April 5th, meaning that the stock is no longer cheap.Jefferies has upgraded its rating for industrial materials maker Morgan Crucible from hold to buy, saying that the stock now trades at a hefty discount to the sector given the last few months' underperformance.The broker expects an 'in-line' update when the firm gives its first-quarter trading update on May 8th with modest year-on-year growth in both sales and earnings to be reported.Jefferies has now raised its full-year 2012 normalised pre-tax profit forecast from £119.1m to £127.6m and lifted its target price on the stock from 300p to 365p.BC