Broker tips: UK banks, Housebuilders, Countrywide

30th Sep 2013 12:00

Bank of America Merrill Lynch (BAML) said that the top-line recovery across the European banking sector should be the most striking in the UK, helped by the ongoing improvement in the macro-economic picture."Helping explain the preference for the UK banks is the economy recovery underway currently. As we show in the margin. Investors expect the UK economic recovery to continue in 2014, with gross domestic product (GDP) [growth] of 1-2%, house price inflation of 1-5% and loan growth of 1-3%," BAML said. "With our economist forecasting 2.2% UK GDP [growth] and house prices already growing at 5%, the responses [to a survey] suggest that there may be upside to investors macro expectations, which could feed through positively to share prices."Housebuilding peers Persimmon and Barratt Developments were making gains on Monday morning after JPMorgan Cazenove upgraded its ratings for both stocks to 'overweight'."Despite taking what we view as a conservative stance on house price inflation, volume growth and cost inflation, our earnings per share estimates for 2014 and 2015 are around 25% ahead of Bloomberg consensus. We view the recent sell-off as a buying opportunity."Credit Suisse has reiterated its 'outperform' rating for housebuilder Countrywide, saying that an earlier-than-expected start to 'Help to Buy' should give the company a boost."Countrywide's share price has been weak during the past few weeks owing to share placings and uncertainty over a possible change/cancellation of 'Help to Buy' 2. With these removed, we strongly reiterate our 'outperform' rating and 705p price target."BC