Charles Stanley cuts Melrose Industries to 'reduce' and suggests short term exit

12th Aug 2015 15:58

(ShareCast News) - Charles Stanley reduced its rating for Melrose Industries, and suggested investors pull out for the short term.The brokerage set a 12 month price range for the stock of 238-307p, from a 281.4p target in March.Analyst Rae Ellingham said Charles Stanley still sees value in the industrial turnaround specialist, but there were better growth prospects elsewhere in the market.Unless there is an acquisition, there is little reason for Melrose's share price to move, prior to the sale of its major business holding Elster Group for £3.3bn, Charles Stanley said. Melrose Industries has said it was looking for a new acquisition for some time now.Ellingham said Melrose's remaining division, Brush Turbogenerators, was performing as expected but was in a market where budgets were reduced."Melrose has been restructuring the business in order to achieve a better performance in current market conditions and the bulk of restructuring has now been completed, leading to an expectation of a better performance from the second half of the year and significant benefits are anticipated to be realised in 2016," Ellingham said in a note.Charles Stanley said due to better prospects elsewhere in the market, investors should exit Melrose and re-buy when the sale of Elster is closer to completion.Shares in Melrose were down by 0.19% to 268.50p at 1653 BST.