Sign up
Tech Capital

Broker spotlight, including HSBC, Plus500, Rio Tinto, ITV, Reed Elsevier...

hsbc-350.jpg
HSBC has been downgraded by Bernstein
Giles_55af4ddca6481.jpg

US broker Bernstein has downgraded HSBC (LON:HSBA) as the risk/reward balance is evenly matched at the Asia-focused bank.

Potential upside drivers such as the yield and US rate rises are priced in, but they also provide downside support leaving the shares with little place to go.

“We don’t see any clear avenues for management to break out of this deadlock now – especially in an environment where income is sluggish.

“Looks like a slog to keep income and costs flat and continue to build capital.” 

‘Market perform’ in the new rating with a 650p target price. 

Spread bet firm Plus500 (LON:PLUS) tumbled yesterday as it froze 55% of UK accounts due to money laundering checks.

Liberum remains a buyer following the decline, but says how many clients it loses and the longer term brand damage are the key issues. 

Its price target is under review but fair value is 490-570p, says the broker.

Bwin.party digital entertainment (LON:BWIN) has been kept as ‘underperform’ by Credit Suisse with a target price of 80p despite the recent outbreak of bid interest.

The broker says there is strategic rationale for the potential acquisition of bwin.party by GVC or 888 Holdings, with significant synergy potential.

But the broker sees limited upside to the current share price, even in a scenario where a deal completes. 'Fair value' from a deal is 114p, Credit Suisse adds.

US broker Jefferies remains switched on to broadcaster ITV (LON:ITV), rating the shares a 'buy' and lifting the target price to 291p from 231p.

"ITV remains a focused way to play the UK..," says analyst David Reynolds, who add that the broker thinks it's uniquely positioned to leverage international syndication opportunity.

"The M&A debate continues to rage and ITV looks more attractive not less as Crozier's business model transformation sustains."

In another upgrade, heavyweight Goldman raises its rating on information provider Reed Elsevier (LON:REL) to 'buy' from 'neutral'. 

The broker note boosted the shares, which were up 2.1% making the company  the second biggest gainer on Footsie.

Sage Group (LON:SGE) was given a price target upgrade by Jefferies to 650p, from 575p, and the recommendation was a repeated 'buy'.

Among the big losers was miner BHP Billiton (LON:BLT) which shed 2.84% to 1,431p.

HSBC moved its rating on the group to 'reduce' from hold, while JP Morgan Cazenove also had the daggers out.

It lowered the target price to 1,425p from 1,600p and retained a 'neutral' stance.

Rival mining giant Rio Tinto (LON:RIO), meanwhile,  has finally signed off the huge underground development plan for the Oyu Tolgoi copper mine in Mongolia. 

Bank of America Merrill Lynch say it is good news though it had already included underground production commencing in 2019, in its forecasts, hence the target price remains 2,700p and the rating ‘underperform’.

Satellite communications group Inmarsat (LON:ISAT) should not be affected longer term by the rocket failure that delayed its latest satellite launch, Merrills said.

The rocket would have launched I-5 F3, the satellite required for global mobile coverage, but the delay is expected to have a small negative effect on 2015 earnings. Buy says the broker.


© tech Capital 2018

Tech Capital, a subsidiary of Proactive Investors, acts as the vanguard for listed tech companies to interact with institutional and highly capitalised investors.
Headquartered in London, Tech Capital is led by a team of Europe's leading analysts and journalists, publishing daily content, covering all key movements in the Technology market.