Broker tips: RBS, Admiral, BHP Billiton

22nd Jan 2014 11:42

Royal Bank of Scotland (RBS) was a heavy faller on the FTSE 100 on Wednesday morning after UBS lowered its recommendation for this stock from 'neutral' to 'sell' and cut its target price from 350p to 300p.The Swiss bank said that RBS's new strategy - with management now focused on business restructuring instead of balance-sheet restructuring - should help to underpin operating improvements and business efficiency. "However, we think the share price already discounts much of the progress we expect the group to make over the next 18 months or so, leaving risk of underperformance even if management outperforms business targets," said UBS Analyst John-Paul Crutchley.Numis Securities has upgraded its rating for Admiral, saying that it sees further upside for car insurance stocks as confidence in earnings, dividends and growth improves.Admiral has been raised from 'add' to 'buy', with its target price lifted from 1,425p to 1,710p. Johnson said that the current valuation "materially undervalues the company's quality and medium-term prospects".Canaccord Genuity has kept a 'hold' rating and 2,040p target price for BHP Billiton despite its positive view on the mining group's second-quarter production report on Wednesday."We retain our view that the investment programme will lead to lower returns than the group averaged over the last decade or so, limiting the appeal of the shares to investors."BC