Broker tips: RSA, M&S, Rio Tinto

5th Nov 2013 12:27

RSA Insurance's valuation is 'too great', according to Panmure Gordon which reiterated its 'sell' rating on the stock following the firm's gloomy trading update on Tuesday.The broker said: "We believe that the shares are currently overvalued given that they are trading at c2.6x net tangible asset value (NTAV) which compares to the Lloyds based non-life sector trading at c1.3-1.8x NTAV. Having cut the dividend there is no longer the significant yield premium to the sector."Investec has labelled Marks & Spencer as a 'hold', saying that the retailer's first-half results "lack sparkle".Nevertheless, the broker admitted that the stock's valuation isn't that expensive with the shares trading at 14.1 times current-year earnings, compared with the wider sector trading at a multiple of 15.Credit Suisse has reiterated its 'outperform' rating and 3,900p target price for mining giant Rio Tinto, saying that the stock remains a "compelling investment case" despite recent strength.The Swiss bank said: "With valuation, gearing and the corporate strategy generally heading in the right direction investors need only worry about future iron ore price expectations. If investors can convince themselves that a collapse in the price is not imminent then there need be no reason not to hold Rio Tinto shares into the future."BC