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Broker Round-up Part 1: BSkyB, WPP, Hays, Michael Page International and Rio Tinto

Last updated: 10:41 13 Sep 2012 EDT, First published: 14:41 13 Sep 2012 EDT

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Investec reckons BSkyB should be looking over its shoulder as telecoms giant BT (LON:BT.A) makes its weight felt in the sports broadcasting arena.

The broker sticks to its ‘hold’ rating and 680 pence target price but sees “some issues to tackle” for the broadcast heavyweight.

Yesterday, it was revealed its rival bought the rights to screen Premiership rugby for £152 mln to add to its Premier League football offering next year as it builds its own sports channel.

However, analyst Steve Liechti notes that Sky still dominates international rugby coverage.

New York-headquartered broker Jefferies upgraded marketing giant WPP (LON:WPP) back to ‘hold’ from ‘underperform’ now it views the firm’s lower full-year expectations as achievable.

“Following weak organic growth in the second quarter and a lowering of full year guidance, we see consensus moving to more achievable expectations,” said analyst Will Smith.

He adds that the company, headed by advertising tycoon Martin Sorrell, looks more attractive now it has moved from a 20 per cent premium to the FTSE 100 to a seven per cent discount.

In its review of recruitment companies, Morgan Stanley announced its preference for Hays (LON:HAS) and Michael Page (LON:MPI), which it says offer strong growth prospects.

With Hays’ share price below 80 pence, analyst David Hancock reckons investors are pricing in the recession in Australia and forgetting about the UK and Ireland business complaetely.

“As such, we believe the shares offer two free options, on a better outcome for the Australian economy and value extraction in the UK&I business,” said the analyst, who has an ‘overweight’ rating and 95 pence target price.

“If both of these materialize, they would be worth 25p or more on the share price.”

Hancock also likes Michael Page, on which he also has an ‘overweight’ stance.

“A key attraction of Hays and Michael Page, especially relative to Adecco and Randstad, is that they offer strong through-the-cycle growth as well as leverage to the cycle. Michael Page is best positioned in this respect.”

After an analyst visit to Rio Tinto’s (LON:RIO) Kennecott Utah Copper site visit, broker Deutsche Bank said it was surprised by the speed at which the grades have picked up.

Analyst Rob Clifford suggests investors buy shares in the mining giant with a bullish 4,850 pence target price against the current price of 3,031 pence, down 46 pence today.

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