Broker tips: RBS, Prudential, Aviva

16th Aug 2013 12:00

Investec has downgraded its rating for part-nationalised lender Royal Bank of Scotland from 'hold' to 'sell', saying that the stock's valuation appears full.The broker said it still believes RBS is firmly on track to eventually achieve a sustainable recovery. "However, we still believe that even the current status quo offers a painfully slow pace of recovery with return on equity of 0% in 2013e, 3.0% in 2014e and 5.0% in 2015e."Insurance giant Prudential was making gains on Friday after Nomura raised its target price for the stock from 1,392p to 1,487p and reiterated its positive stance for the company, saying it remains on track to hit targets.Nomura said that Prudential remains its top pick in the sector after it being encouraged by the company's first-half results on Monday. "The group has the most attractive growth profile compared to peers, and we believe this should mean continued performance in the shares," the broker said.Exane BNP Paribas has cut its recommendation for insurance group Aviva from 'outperform' to 'neutral', saying it sees limited upside after a strong run recently.The broker said that the share price has increased significantly under new management after the firm's interim report given the cost savings made the in the first six months of the year. However, profits remain challenged by weaker flows and declining revenue margins, with UK and Europe unit-linked revenue margin falling by more than the cost decline in the first half.BC