Mike Ashley’s Sports Direct International (LON:SPD) was top of the FTSE 100 league during Tuesday’s early deals, and at the same time the stock was upgraded to ‘outperform’ by RBC Capital Markets.
Analyst Richard Chamberlain says new online initiatives, such as a ‘click and collect’ service, are boosting the sports retailer.
He also highlights that some risks to the business - mostly notable the threat to ‘zero-hour’ contracts used by the group - have reduced recently following the UK general election.
“We also think Sports Direct looks better value now versus its peer group, particularly other sports chains and global peers,” Chamberlain said in a note.
Today’s ‘outperform’ rating also comes with an upgraded price target, which increases to 800p from 650p.
The analyst at the same time downgrades Primark owner Associated British Food (LON:ABF) to ‘sector perform’ from ‘outperform’, though RBC’s price target remains 3200p.
“We continue to think Primark offers investors a relatively rare early stage international roll-out story,” Chamberlain said.
“However ABF is lacking earnings momentum, the US apparel market remains very competitive and we see more valuation upside for some other stocks in the sector.”
Elsewhere, it was lon:ba.="" rel="3215" switcheroo="" turn="">Greene King (LON:GNK) to ‘overweight’ from ‘equal weight’ and dropped its rating for rival Mitchells & Butlers (LON:MAB) down to ‘equal weight’.
lon:ba.="" price="" rel="3215" target="">Greene King, compared to the current price of 851p, and a 500p price target for Mitchells and Butler still sees some upside to the current 469p price.
Nomura raised its glass to Diageo (LON:DGE), upgrading the alcoholic drinks group to ‘buy’ from ‘neutral’ and lifting its price target to 2,180p from 1,930p.
The investment bank also today revised targets in the telecoms sector. Colt Group (LON:COLT) is no longer on Nomura’s ‘sell’ list and is now given a ‘neutral’ rating and a newly upgraded 190p price target.
BT Group (LON:BT.A) is retained as a ‘buy’ by Nomura, though the price target increases to 560p from 550p.
Swiss bank UBS upgrades replacement hip maker and perennial takeover target Smith & Nephew (LON:SN.) to ‘buy’ from ‘neutral’.
BAE Systems (LON:BA.) has been rated outperform by RBC even though the target price is trimmed to 560p.
Shares have been under pressure recently on concerns BAE will have to cut its 2015 guidance due to issues in the Australian naval business and an order for Eurofighter slipping out of this year.
While these may knock 5% from 2015’s earnings, they have no impact on underlying defence trends in the US, the UK and the major export markets says RBC.
Tullow Oil (LON:TLW) remains a sell for Cantor Fitzgerald, which has put its target price under review.
The Zumba exploration well in the Norwegian Sea has not encountered hydrocarbons and will now be plugged and abandoned. The broker has ascribed a 151.8MMboe gross to the Zumba prospect with a 20% chance and that has now been removed.
Boiler pump maker Hayward Tyler’s (LON:HAYT) full-year results were broadly in line with finnCap’s expectations.
Significant investment is taking place at its plant in Luton, which – coupled with the potentially game-changing alliance with FMC Technologies and the improving power prospects – provides an encouraging outlook. The shares appear cheap and a target of 113p is retained by the broker.