Broker tips: Unilever, Regus, Energy stocks

20th Mar 2012 11:19

Investec has cut its recommendation for food and cosmetic goods giant Unilever from buy to hold and cut its target price from 2,170p to 2,100p - the first time it has downgraded the stock in 17 years.While the broker says it is still an admirer of the company, two things are a cause for concern: a) the increased competitive threat from US rival Procter and Gamble; and b) the risk of increased input cost guidance in the face of $125 Brent crude prices and $1,200 palm oil. Meanwhile, the valuation is said to be "not undemanding".Regus's profit may have doubled in 2011, but they still weren't enough to meet Peel Hunt's forecast, with the broker maintaining its hold rating on the office space provider on Tuesday morning."We believe that Regus is bumping along sideways, which would be consistent with the peer group (employment agencies, Adecco in particular). This may hold back sentiment," Peel Hunt said.While the broker reiterates its hold rating and maintains its forecasts, the target price is hiked from 75p to 110p to reflect a more "risk-preferring market".Nomura has highlighted National Grid and United Utilities as its key picks in the UK utilities sector, but has warned that uncertainties still remain given the current climate and regulatory intervention."Energy continues to be a contentious issue in UK politics - the economic downturn, combined with a projected rise in energy costs, means that returns through the energy value chain are an easy target for politicians," the broker said. "Given political uncertainty, anaemic fundamentals and negative real yields, we prefer the UK regulated utilities, which offer stable, inflation-indexed returns."As part of Nomura report, it made the following ratings changes:Centrica: target raised from 340p to 350p, neutral rating unchanged. Drax: target raised from 480p to 485p, reduce rating kept. National Grid: target raised from 700p to 705p, buy rating kept. Pennon: downgraded from buy to neutral, target lifted from 1,590p to 1,640p. Severn Trent: downgraded from buy to neutral, target lifted from 1,590p to 1,640p. SSE: reduce rating and 1,405p target maintained.United Utilities: upgraded from neutral to buy, target raised from 625p to 695p.BC