Broker spotlight: Royal Mail, Phoenix Group, Arm, Reckitt Benckiser, Accesso, Bushveld...

ARM still quality and set for an upturn, Supermarkets heading for price war and Accesso's deal with Merlin impresses.


Life insurer shares were hit hard on Friday after the leak of a FCA investigation into closed books on products sold before 2000.

The probe will look at “rip-off” exit charges on pensions and investments, poor service and high exit fees if customers try to leave.

Canaccord has cut its price target on Phoenix Group (LON:PHNX), which specialises in closed fund or zombie funds, to 800p from 865p, adding while the company’s disclosure is good relative to others in the industry it will make more deals more difficult due to the uncertainty. ‘Buy’ remains the rating.

ARM (LON:ARM) has been under pressure recently on concerns over its royalty revenues, but Barclays Capital said it remains one of the highest-quality names in European Technology. 

The company designs the chips that power Apple’s mobile ranges and there have been concerns over the iPad’s maker growth rate, but these may be about to ease suggests the broker. 

“After 6-9 months of estimate pressure, particularly around royalty revenue, we anticipate a return to positive estimate momentum during the coming quarter. 

“ARM's long-term prospects are also improving, as its gains in networking and servers are becoming clearer and supportive of c.20% revenue growth for the foreseeable future. “

“Given such strong fundamentals, attractive valuation and the potential for increased shareholder returns over the medium-term, we reiterate our ‘Overweight’ rating and raise our price target to £12.”

Credit Suisse has taken a scapel to its target prices for the major miners. Glencore Xstrata (LON:GLEN)  now has a 380p target (400p), Anglo American 1,800p (1,900p) though Ukraine-based Ferrexpo (LON;FXPO) gets a nudge up to 175p. Rio Tinto (LON:RIO) and Anglo remain two of its favourites.

Reckitt Benckiser strong growth is set to continue for much longer period than previously expected says Deutsche Bank, which has raised it target price to £60 and maintained a buy ‘stance’.

French broker Societe Generale said that now Morrisons (LON:MRW) has acknowledged the structural changes underway in the UK grocery sector, and, in particular,  admitted that there is a (largely underestimated) threat from hard discounters,  the UK is heading for a price war. 

Morrisons and Tesco (LON:TSCO) are rated ‘sells’, while Sainsbury’s (LON:SBRY) is a ‘hold’.

Nomura has reduced its forecasts for Royal Mail for a new cost–cutting drive, final delivery competition from TNT and an estimate of the likely increase in the cost of servicing the pension. The price target is 490p and rating on the shares ‘neutral’.

Accesso Technology (LON:ACSO) has signed a three-year deal with Merlin Entertainments (LON:MERL) that gives the attractions group use of its e-commerce software , Passport. 

City firm Canaccord Genuity said cross-selling Passport outside the US is becoming a “major growth driver for the group”.  The broker, which has a ‘buy’ recommendation and 770p target price, said the cross-selling is starting to gain momentum.

Panmure Gordon says e-Therapeutics (LON:ETX) achieving any sign of efficacy in a phase I trial is clearly above and beyond expectations. 

With 17p of cash per share and a novel platform underpinning the investment thesis, today’s news is a strong conduit to a period of outperformance, said the broker.

RFC Ambrian is maintaining a 'specualtive buy' recommendation on Bushveld Minerals (LON:BMN). The company represents cheap exposure to iron ore, tin, phosphate, vanadium and thermal coal and it’s likely that Bushveld will spin some of its assets out into separate vehicles once studies have been completed.

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