Broker tips: Tesco, Aberdeen, Debenhams, Utilities

2nd Dec 2013 12:05

Tesco's share price was firmly lower on Monday morning after analysts at HSBC downgraded their rating on the stock from 'neutral' to 'underweight'."We believe a 5.2% UK operating margin is not sustainable, and that aiming for any margin is the wrong strategy. In our view, a margin fall in inevitable and a margin reset is necessary. We advocate Tesco slashing its margin to 2-3%."Credit Suisse has cut its recommendation for asset management group Aberdeen from 'outperform' to 'neutral', saying that the stock is now fairly valued.The bank said that the shares are now largely factoring in the potential 12% earnings accretion from the recently announced deal to buy the Scottish Widows Investment Partnership (SWIP) business from Lloyds. Analysts said they are now "generally less constructive on the underlying flow and margin dynamics".Barclays Capital has lowered its rating for High Street retailer Debenhams from 'equal weight' to 'underweight', saying it sees 18% downside to the current share price. The bank expects Debenhams to report a 12% fall in annual pre-tax profit in the year to August 2014 as "margin-erosive" sales online cannibalise store sales. Barclays also said that share buybacks are now likely to be postponed until 2016.Deutsche Bank has taken Centrica off its 'buy' list and retained a 'hold' recommendation for SSE, despite that the government's efforts over the weekend to address energy affordability."Temporary relief on green costs would be welcome but group earnings growth for Centrica and SSE still requires higher prices in our view. We see further political battles over energy prices in the run up to the probable May 2015 UK general election," Deutsche Bank said.BC