Broker tips: Tesco, RBS, Ashtead

18th Apr 2012 10:28

Tesco's preliminary results are a 'non-event' after coming in line with expectations, according to Merchant Securities, which says that the key focus point is the strategy going forward."The statement fails to provide anything new on their strategy. UK remains the key focus with £1bn investment to achieve their 'UK Plan' focussing on six key elements. The key questions is, how long will the recover take?" said analyst Amish Chohan.Merchant Securities says that the stock is trading on at 9.5 times 2013 earnings, which is a justified discount sector peers Sainsbury and Morrison, which trade at 10.6x and 10.2x, respectively. As such, the broker thinks Tesco is "fairly priced" and maintained its hold rating.Investec is 'not wildly excited' ahead of Royal Bank of Scotland's first quarter update next month, but has maintained its buy recommendation and 30p target price on the stock.The broker expects the part-nationalised bank to report a small loss per share of 0.1p, notwithstanding seasonal benefits in Global Banking and Markets and positive one-offs from liability management and aircraft leasing."However, look a little harder, and you may find the best results for at least four quarters in GTS, Wealth, US R&C, Insurance as well as GBM," the broker said. "'Core' Ulster will be dismal, and Non-Core losses remain substantial, but there is a (somewhat distant) recovery story fighting to get out!"Rental equipment firm Ashtead was a high riser on the FTSE 250 on Wednesday morning, helped by last night's strong results from US peer United Rentals."We stress these successive record quarterly performances from both United Rentals and Ashtead are being delivered without the benefit, as yet, of any macroeconomic recovery," the broker said.Furthermore, data from the American Institute of Architects (Architecture Billings Index) and Rouse (tracking US equipment residual values) prompts Jefferies to continue to see upside risks to consensus estimates for Ashtead in 2013.The broker recommends to buy Ashtead ahead of the full-year results in June. A 300p target price is given.BC