BEST OF THE BROKERS
HAYS
Citigroup has downgraded the global recruitment company from “hold” to “sell” following first-half results last week, which saw earnings before tax of £63m in line with estimates. The broker is sceptical about Hays’ UK business, saying that it lacks strategic direction. Though it lifts its target price to 75p on earnings upgrades, the rating is cut due to shares trading well above that price.
ST JAMES’S PLACE
Nomura has maintained its “neutral” rating on the wealth manager, but raised its target price to 370p following strong 2011 results last week. The broker sees possible changes to pension rules and economic uncertainty as challenges to achieving growth in 2012, but says SJP’s business model is one of the best in the sector (although warns this may already be priced in).
LANCASHIRE HOLDINGS
Deutsche Bank downgrades the speciality insurance group from “buy” to “hold” with a target price of 870p based on its current valuation, which the broker sees as having the company’s earnings power for 2012 already priced in. The broker says the company’s 2011 results were “decent” considering catastrophe losses, and sees good underwriting opportunities for this year.
EASYJET
UBS has downgraded the budget airline from “buy” to “neutral” and reduced its target price from 490p to 480p, saying it does not see sufficient upside to the shares given the firm’s strong performance since the start of the year. The broker says there is a lack of visibility on summer bookings, which are key to the full year results, and is concerned that rising oil prices will add to fuel costs.