Broker tips: Serco, Smiths Group, Jimmy Choo, AstraZeneca

2nd Jul 2015 11:22

Serco's stock was extending gains on Wednesday after a well-received first-half trading update the day before, with Numis Securities providing a further boost by upgrading its recommendation from 'reduce' to 'hold'.Numis said Serco revelations that first-half trading had been a little better than expected, was "encouraging".The broker highlighted the company's strong contract renewal rate, with £800m of the £1bn contracts won during the period being re-bids of extensions.The broker kept a 130p target price on the stock, which was up a further 0.6% at 126.4p on Thursday morning.Share in Smiths Group rose nearly 3% on Thursday after JPMorgan Cazenove reiterated its 'overweight' stance on the stock, pointing to close to 13% upside to its unchanged 1,280p price target."We believe the group is currently on track to deliver on our unchanged full year forecasts for 2015," the broker explained.The US broker expects the new management to undertake a strategic review. The group is likely to remain an industrial conglomerate, albeit with increased focus on businesses/market segments where Smiths can generate faster than global GDP growth and premium returns, said JPM.Shares in the fashion retailer Jimmy Choo rose on Thursday after Barclays initiated coverage with an 'overweight' recommendation and a price target of 208p on expectations for stronger growth than its sector peers.Barclays predicted earnings per share would grow at an average pace of 14% over the next five years thanks to store openings with like-for-like growth reaching between 4 and 5% per year.By 2020, the shoe retailer was also expected to boost its margins on an earnings before interest, taxes, depreciation, and amortization basis from 16.8% to 20.8%.Berenberg upgraded AstraZeneca to 'buy' from 'hold' and raised the price target to 5,200p from 4,800p, saying that Oncology will drive future growth.Berenberg noted that AZN shares reached highs of 4,800p during last year's Pfizer approach. Since then, sentiment has weakened and the shares are not far off 12-month lows.It said the company has made good progress in its oncology pipeline. Lynparza is approved in the US and Europe, and should be a blockbuster drug, said the bank, which expects the oncology franchise to grow from a low of $2.8bn this year to $6.9bn by 2013.