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Broker spotlight: Goldman softens stance on miners

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The US giant lifted its ‘Sell’ rating on Antofagasta to ‘Neutral’

--ADDS DekelOil, Breedon Aggregates AND InternetQ--

It seems Goldman Sachs is softening its stance on the beleaguered mining sector.

The US giant lifted its ‘sell’ rating on Antofagasta (LON:ANTO) to ‘neutral’, while initiating coverage on KAZ Minerals (LON:KAZ) with a ‘hold’ rating and a price target of 110p, some 20p higher than last night’s close.

The broker is also bullish on the oil sector, rating oil services company Hunting (LON:HTG) as a ‘conviction buy’ and upping its price target to 560p from 546p.

Elsewhere, engineering consultancy WS Atkins (LON:ATK) was the beneficiary of a double broker upgrade, after the news that it is buying the projects, products and technology business of EnergySolutions, for US$318mln.

JP Morgan Cazenove and Peel Hunt backed the deal, boosting their target prices on the shares to 1,809p from 1,636p and 1,700p from 1,647p respectively.

It wasn’t all good news, however, as Jefferies International worried about the health of pharma giant GlaxoSmithKline (LON:GSK).

The broker kept its ‘hold’ rating but cuts its price target by some 100p to 1,250p.

Meanwhile, traders and building material companies were in the cross-hairs of Deutsche Bank after lower construction output figures last week.

Deutsche clipped the target price of plumbing and heating product distributor Wolseley (LON:WOS) to 4,400p from 4,700p, while specialist building product distributor SIG (LON:SHI) had its target price shaved to 149p from 154p.

Adam Forsyth, analyst at Cantor Fitzgerald, says DekelOil’s (LON:DKL) management team is “building a track record of delivering on expectations” after the company announced the start up of a new kernel crushing plant.

“The plant should grow earnings in line with our forecasts from FY2016 and the early start will create some modest marginal income, de-risking our FY2015 forecasts,” he said in a note whilst repeating a ‘buy’ recommendation.

Irish stockbroker Goodbody repeated its ‘buy’ recommendation of Breedon Aggregates (LON:BREE) following news of a new acquisition and what analyst Robert Eason called a strong trading update.

“We view this morning’s announcements from Breedon Aggregates as being very positive and the bias to forecasts remains on the upside, thus underpinning our positive stance on the stock,” the analyst said in a note.

Elsewhere, Cannacord Genuity described InternetQ’s (LON:INTQ) update as “solid”, highlighting a 20% rise in revenue and a 30% increase in earnings during the nine-months to September 30.

Analyst Simon Davies pointed out that the company would be making changes to its marketing approach and whilst there would be a short term impact there would also be benefits. “We stick at BUY, but recognise that sentiment is unlikely to materially improve until it shows improving cash flows coming through from its revised strategy,” he said.

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