Broker tips: Wolseley, St. Modwen, Ocado

1st Jul 2014 12:57

Credit Suisse has lowered its price target for Wolseley from 4,000p to 3,800p to reflect currency movements, but has maintained its positive stance, saying it sees "robust" growth for the heating, plumbing and building products group."Our core thesis on WOS remains intact, and the stock remains on the Credit Suisse Focus List, with our positive view predicated on the combination of upbeat underlying trading momentum, potential for capital returns and valuation."Better-than-expected first-half numbers from property and land regeneration firm St. Modwen Properties on Tuesday prompted Numis Securities to upgrade its recommendation from 'add' to 'buy', saying that the stock's valuation "feels too low"."Momentum across all aspects of the business is improving, with the demand for residential land growing and corporates now starting to spend on capex after significant balance sheet de-leveraging over the past five or so years," Numis said.A swing into black at Ocado wasn't enough to change Shore Capital's negative stance on the stock, saying it sees "vulnerabilities" in the online grocer's business model.The broker said that Ocado's business provides a good service "but is not a proprietary retailer of any substance to our minds as it depends upon Waitrose (John Lewis Partnership) and Morrisons". It also warned of a potential loss of the relationship with Waitrose, a further tightening industry gross margin and lower delivery fees driven by Morrison and Tesco's online push.BC