Broker tips: Smiths Group, Kazakhmys, Babcock

15th May 2012 11:18

Investec has cut its target price for technology firm Smiths Group following the firm's third-quarter trading update this morning, saying that while there was no major surprises, there also wasn't any reason to get excited.With little change in the operating performance from the interim results, Investec has left its full-year forecasts unchanged following the statement. However, it has cut its target price from 1,130p to 1,050p to reflect the recent sector de-rating.With the stock trading at 10.3 times earnings, the broker has maintained its hold recommendation on the stock.In spite of Kazakhmys's recent underperformance, UBS has maintained its sell recommendation on the stock, slashing its target price by a fifth this morning."The share is testing its 52-week low despite copper prices so far being resilient, mainly on concerns around cost inflation, stagnant production for three years, and increasing capital expenditure," UBS said in a research note this morning.After having cut Kazakhmys's earnings per share (EPS) forecasts for 2012-14 by 10-20%, UBS has reduced its its price target for the stock from 900p to 720p.Jefferies has maintained its buy recommendation and hiked its target price for engineering support services Babcock after the firm's strong full-year results and bullish outlook statement this morning.Babcock said that it expects to make "further strong progress" in the 2012/13 fiscal year and earnings should be ahead of previous guidance. Jefferies has raised its EPS estimates for the years ending 2013 and 2014 by 6% (9% on an underlying basis) and has, in turn, lifted its target price for the stock from 780p to 910p."Organic revenue growth is accelerating as Babcock rides an attractive outsourcing wave," Jefferies said.BC