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Brokers: Barclays bullish on financial services

the Barclays building in Canary Wharf, London
Barclays upgraded the price targets of seven of its peers today

Barclays Capital was bullish about fellow banking stocks and finance providers on Wednesday as it upped its price targets for seven of its peers.

It raised its price targets for Aldermore Group PLC (LON:ALD), Close Brothers Group PLC (LON:CBG), IG Group Holdings PLC (LON:IGG), OneSavings Bank PLC (LON:OSB), Paragon Group of Cos PLC (LON:PAG), and Shawbrook Group PLC (LON:SHAW).

In a note today, Barclays said it was particularly fond of Close Brothers and Provident Financial PLC (LON:PFG), explaining that they’re “the most defensive names [in the sector] against a potential UK recession” given their “longer term asset quality track record and lending discipline”.

Speaking about another of its price upgrades, the bank said IG’s strong results and positive outlook and “prudent” business structures make it a decent stock.

Despite Barclays’ positive sentiment towards the finance sector, its bullish outlook was not reciprocated by UBS.

The Swiss banking giant downgraded Barclays PLC (LON:BARC) from a ‘buy’ recommendation to a ‘neutral’ rating.

UBS said the weaker outlook for domestic and capital market banking, compounded increased regulatory uncertainty.

On a more general note, it blamed the EU referendum for its more negative outlook on banks, saying the result “shifted [its] domestic macro outlook from decent expansion to juddering halt.”

Elsewhere, investment management company Ashmore group PLC (LON:ASHM) was moved down by both Citigroup and Peel Hunt.

Peel Hunt moved Ashmore down to a ‘reduce’ recommendation from ‘hold’, although it raised its share price target by 20p to 330p.

Similarly, Citigroup downgraded the stock to a ‘neutral’ rating from ‘buy’, although it also lifted its price target slightly to 350p from 330p.

The American investment bank says that the downgrade is purely on “valuation grounds” and says the current share price already fairly reflects the positive outlook for Ashmore.

Budget airline Easyjet PLC (LON:EZJ) was downgraded to a ‘neutral’ rating from ‘overweight’ by JP Morgan Cazenove.

The investment says Easyjet has a “greater exposure to a likely volatile UK GDP and FX outlook”, adding that the company could be at risk should it be removed from the common aviation market when the UK officially leaves the EU.

Elsewhere, Revolution Bars Group PLC (LON:RBG) had its ‘buy’ recommendation reiterated by both finnCap and Numis.

Broker finnCap also repeated its price target of 232p for the bar chain, and praised the firm’s sales growth which was ahead of its expectations, as was the performance of the new sites opened in its 2016 financial year.

Numis repeated its 265p target price, and also cited the “solid” trading update in the year to June, as well as noting the “strong contribution from new bars”.

On to the small caps, and Northland issued a ‘buy’ recommendation and price target of 171p for ImmuPharma PLC (LON:IMM).

The broker said the pharma company’s Lupuzor lupus treatment “could achieve mulit-billion dollar annual sales”, particularly given the unmet medical need for an effective treatment against the chronic.

The same broker repeated its ‘buy’ rating for mining company W Resource PLC (LON:WRES), as well as reiterating its price target of 1p for the stock.

Northland points out that W Resources has accelerated the stage 2 expansion plans at its La Parrilla tungsten mine in Spain, while it is still on track for initial production later this year.

And finally, Cantor Fitzgerald reiterated its ‘buy’ recommendation for oil and gas explorer Providence Resources PLC (LON:PVR), after the Irish-based firm repaid its US$20mln Melody debt facility today.

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