Broker tips: Tesco, Royal Mail, ARM Holdings, IG Group

22nd Jul 2014 12:42

New board members at Tesco should give "fresh perspectives" for the supermarket group, but the business will continue to face the the same structural problems, according to Deutsche Bank.The bank maintained a 'buy' recommendation for the stock but slashed its target price from 342p to 313p after cutting its profit forecasts.Panmure Gordon has repeated its 'hold' recommendation for Royal Mail Group, saying that the dividend yield should support the postal firm's shares despite the disappointing performance of its parcel division in the first quarter."[Competition] concerns, combined with the recently announced French competition authority investigation into alleged antitrust breaches in France, are likely to continue to weigh on the share price in the near term. The dividend yield, however, remains attractive at 4.5% and should continue to provide support to the share price."Recent weakness in the share price of ARM Holdings should be seen as a "buying opportunity", according to Investec after a better-than-expected second quarter from the chip designer. The broker retained its 'buy' rating and 1,100p target price."We expect to lower our second-half royalty forecast, but expect this to be offset by upgrades to second-half licences. Royalty weakness is not ideal, but it should bounce back as the 4G cycle kicks in, with licence strength underpinning the mid-term outlook." IG Group offers "good value", according to Numis Securities, after the CFD and spreadbetting firm delivered a "substantial" increase in its dividend and lifted its payout ratio. The broker kept its 'add' rating on the stock with a target price of 665p."IG reported earnings per share a little ahead of our 40.0p forecasts at 40.2p. For us however, the 28% increase in the final dividend to 22.4p with an increase in the ongoing payout ratio to 70% was by far the most significant piece of new information," Numis said.BC