Broker tips: Smith & Nephew, Resolution, Compass

28th Nov 2012 11:14

Investec has kept its 'hold' rating and 670p target price for medical technology group Smith & Nephew following Wednesday's proposed acquisition of Healthpoint Biotherapeutics.The broker said that the purchase is a "good fit" but raises the risk profile of the company as a whole. "For us, whilst the acquisition is broadly about strategy, expanding S&N's wound business, it takes S&N into riskier areas, with future performance linked to the outcome of clinical trials," Investec said.Shares in insurance giant Resolution were in the red on Wednesday morning after UBS cut its rating on the stock from 'buy' to 'neutral', citing a 'less compelling' valuation.The broker said: "Resolution's disappointing nine-month trading, EV write-downs, UK restructuring charges, and recent share-price performance all point to a downgrade to 'neutral'. Jefferies has upgraded its rating for contract caterer Compass Group from 'underperform' to 'hold', saying that last week's full-year results offset some concerns."Compass's £400m share buyback reload, 10% dividend increase and reiterated guidance for FY13E exudes confidence," the broker said in a research report on Wednesday.BC