Broker tips: REITs, Prudential, BBA Aviation

6th Mar 2012 12:01

Jefferies said that the recent earnings season in the real estate investment trust (REIT) sector was 'reassuringly unexciting' and has reduced its net asset value (NAV) forecasts by 2% on average.REIT share prices are up an average of 9% in the year-to-date, with most of this growth coming in January. "Most of the performance we expected in 2012 came in the first two months and we see little to go for in the short-term."While price targets are slashed across the board, to reflect lower assumed NAVs, the broker says that its key recommendation changes are for Land Securities (upgraded from hold to buy) and British Land (downgraded from buy to hold).Nomura has reiterated its reduce rating and 700p target price for insurance giant Prudential ahead of the group's full-year results next Tuesday.Nomura believes that Pru's US business is likely to "plateau" due to the companies intention to moderate its US growth ("since it was becoming too large a part of the group") and its demanding comparatives over the past three years.Furthermore, in Asia, the broker expects double-digit growth for Pru's peer group (AIA, China Life, Ping An), compared with a slowdown for Pru.Charles Stanley has downgraded its rating for aviation support and aftermarket services firm BBA Aviation from buy to add, saying that while the long-term growth drivers are still intact, there are some headwinds in the near-term."The long term drivers for the group remain positive, with Business and General Aviations hours flown forecast to increase 6.6% per annum between 2010 -2020," the broker said. However, Charles Stanley highlights the minimal growth expected in flying hours in 2012 after broadly static second half activity in 2011. As such, the broker expects flat profits and negative earnings per share growth (due to the higher number of shares in issues following the placing) this year.The 230p target price is maintained.BC