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Broker spotlight: Diageo, Whitbread, Debenhams, GKN, OPG, Clinigen ...


Spirits giant Diageo's (LON:DGE) update yesterday wasn't as bad as the market reaction suggested according to Deutsche Bank, though it adds what comes next is crucial.

Adjusting the 0.7% decline in organic sales, Deutsche has managed to come up with a total of 0.6% growth, while US depletions are also improving it said. 

All in all, Diageo is changing for the better, says the broker and it is closer to the end of the change than the beginning. Buy.

Credit Suisse likes Whitbread (LON:WTB) sufficiently to have raised its target price to 6200p, though its ‘outperform’ rating remains the same.

Whitbread shares have risen 120% in 2 years, but looking at opportunities for Premier Inn in Germany the broker can see earnings growing by 11% annually for ten years, which justifies the current rating.

Investec has put a hold rating on drugs distributor Clinigen (LON:CLIN).

A review of its competitive situation and key products suggests it can continue to grow  its portfolio, but services is not growing as fast as expected so the broker downgrading earnings estimates down the road. Target price is 550p. Hold is the view.

India-based power generator OPG (LON:OPG) is about to be transformed, says cantor Fitzgerald, with execution risk about to fall away on the completion of 480MW of projects to take total capacity to 750MW. 

Cantor believes this means most of the real risk is out of the way but the shares do not yet reflect this. 

Positive changes in the wider Indian economy are also being overlooked.  Buy with a target price of 130p, say the broker.

Debenhams (LON:DEBS) has received a bullish update from Citigroup following yesterday’s better than expected interims. ‘Buy’ from ‘neutral’ is the new recommendation.

Engineering  heavyweight GKN (LON:GKN) has been upgraded to ‘neutral’ from ‘sell’ by Goldman Sachs, which also now has a conviction buy stance of oilfield services group Hunting (LON:HTG) sending it shares scooting higher this morning.

Barclays Capital, meanwhile, has upgraded defence specialist QinetiQ (LON:QQ) to overweight, while there price upgrades for Wier (LON:WEIR) to 1,925p from Exane, Chariot Oil (LON:CHAR)  to 20p from 12p from Cantor and BAE (LON:BA.) to 611p from Goldman.

Valve specialist Rotork (LON:RTRK) was a notable downgradeas Barclays Capital cut its stance to ‘equal weight’. 

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