Broker tips: Rolls-Royce, GKN, Thorntons

23rd Dec 2014 12:26

Investec has trimmed its target price for Rolls-Royce from 900p to 860p and kept its 'hold' rating, saying that a faster decline in Trent 700 production "increases headwinds" for the engine maker."The Trent 700, that powers the A330ceo, is currently Rolls' most significant in production engine. We reduce our forecasts for Trent 700 deliveries to reflect reduced A330 production forecasts from 2015 following disappointing order intake and Airbus' investor forum," Investec said.Struggles in GKN's Land Systems (LS) division are providing a drag on investor confidence about the engineering firm, though broker Numis Securities still reiterated its 'add' stance on the stock.The broker said that LS is the most cyclical and therefore lowest-value part of GKN and "should not undermine the value being created elsewhere". The underlying performances of the auto and aerospace divisions are still improving despite softness in the defence market.Thorntons' valuation is set to get a little more expensive after a profit warning from the chocolatier on Tuesday, according to Northland Capital Partners."The [valuation] multiple doesn't appear overly demanding in our view however we expect to see a decrease in consensus forecasts for FY15 and FY16 on the back of today's news, particularly within the UK commercial channel which would put the stock on well over 11 FY15 consensus earnings," the broker said.