Broker tips: Shell, SABMiller, Britvic

14th Jan 2010 13:15

Royal Dutch Shell has had earnings per share estimates cut by RBS which predicts weak downstream earnings in the fourth quarter of 2009 and the first three months of 2010.Forecasts for the final quarter of last year are lowered by 19% to $2.9bn to reflect the impact of 'extremely weak' refining margins and weaker earnings than in Q3 from oil marketing operations. Downstream operations are seen making a net loss of $200m.Expectations for 2010 earnings fall by 4% as the refining business already looks like it's going to have a difficult Q1, says the broker, but RBS keeps its 'buy' rating and £20.75 price target.Swiss banks UBS and Credit Suisse joined in raising a glass to SABMiller, ahead of a third quarter trading update next Tuesday from the world's second biggest brewer.Credit Suisse (CS) has edged up its price target for the stock from 1900p to 1960p on the grounds of strong currency trends and the expectation of a return to sustainable volume growth. With the US dollar flagging in the second half of 2009 against the South African rand and the Colombian peso CS has edged up its 2010 and 2011 earnings forecasts for SABMiller by 2%.CS retains an 'overweight' recommendation on the stock.UBS has reiterated its 'buy' rating of the South African brewer and expects EPS growth in the current year of 17%. Britvic is upgraded to 'overweight' from 'neutral' at JP Morgan which lifts its target price by 10p to 450p as it doesn't think a meaningful M&A risk premium is warranted.The group has indicated that it is keen to acquire soft drinks businesses in Europe, which may involve some equity issue depending on the deal size.Analysts at JPM believe the lack of clarity on any equity issue might account for some of Britvic's discount to the sector, despite robust double-digit earnings growth.UBS also rates the stock a 'buy'.