BEST OF THE BROKERS
SPIRENT COMMUNICATIONS
Goldman Sachs initiates coverage of the communications technology company with a “buy” rating and a target price of 160p, and says it expects the company to maintain its position in the market due to strong customer relationships and sound product innovation. The broker expects Spirent’s stock performance to be catalysed by upside to earnings driven by mobile handset performance-based testing.
IMPERIAL TOBACCO
Nomura has upgraded Imperial Tobacco from “reduce” to “neutral” with the target price raised from 2150p to 2155p. The broker downgraded Imperial in November on concerns over margin pressures and a lack of M&A activity, but now sees the investment case more influenced by prospects for consolidation activity. Nomura stays three per cent below consensus for earnings per share in 2012 but says it cannot remain underweight going into the second half.
BOVIS
Citigroup has upgraded Bovis Homes Group from “neutral” to “buy”, and raised its target price from 495p to 520p. The broker says Bovis’ strong balance sheet and strategic land bank position mean it is well-placed to pursue site expansions that should lead to more aggressive volume growth. Citi is expecting volume growth of 8-10 per cent per year in 2012-13, which should be at the top end of industry figures.