Outsourcing security firm Serco Group PLC (LON:SRP) was downgraded to ‘underperform’ from a ‘sector perform’ rating by RBC Capital Markets, with the Canadian bank lowering its price target to 100p.
Jefferies International also repeated its ‘underperform’ rating for Serco’s rival G4S PLC (LON:GFS), and trimmed its target price to 157p from 160p.
The investment bank downgraded its projected earnings per share (EPS) for the year by 8%, because of “headwinds” created by recent events.
Jefferies says Brexit may well prove unhelpful for the security firm, and also notes the “slowdown in emerging market economies” as another potential stumbling block.
By contrast, Macquarie was very upbeat on gold miners following the recent post-Brexit rise in the price of the precious metal.
It reiterated its ‘neutral’ rating for Fresnillo PLC (LON:FRES) but increased its price target to 1600p from 1000p.
Similarly with Randgold Resources Ltd (RRS), it repeated its ‘neutral’ rating and significantly upped its target for the stock to 9500p from 6500p.
Macquarie said that despite near time uncertainties such as US rate hikes and economic data, it still believes “that gold and gold equities increasingly need to be held as a hedge against economic and political risk.”
As a result, it has a “positive long-term outlook for the sector” and says there are many “tailwinds” supporting gold miner valuations currently.
Elsewhere, Liberum upgraded transport company Stagecoach Group PLC (LON:SGC) to a ‘hold’ recommendation from ‘sell’, although it cut its price target slightly to 225p from 255p in the process.
The broker said that although it still harbours concerns about exposure to potentially weaker rail revenue growth, it feels that “the valuation is becoming supportive”, hence the upgrade.
Defence and security firm BAE Systems PLC (LON:BA.) had its price target upgraded by Goldman Sachs to 653p from 599p, with the heavyweight bank repeating its ‘conviction buy’ recommendation.
Goldman believes that BAE “remains inexpensive” compared to its peers and says that “defence outlook [is] improving”.
It has raised its earnings estimates for the UK and international divisions and “expects BAE to enter a phase of 4%-6% pa organic growth from 2017.”
In its note today, Goldman added that the defence firm should benefit from the weaker £/$ rate, and says “BAE’s product portfolio offers an attractive mix of long-term stability, secular growth and short-term optionality.”
Onto the small caps, and coloured gemstone specialist Gemfields PLC (LON:GEM) has been downgraded by JP Morgan Cazenove to ‘neutral’ from an ‘overweight’ rating.
The bank said that “lack of earnings and cash flow visibility” means that the stock warrants a discount to its peers, at least in the short term.
finnCap has reiterated its ‘buy’ recommendation for Central Asia Metals Ltd (LON:CAML), as well as repeating its 264p target price.
It noted that the base metals explorer has reiterated its copper production guidance of between 13,000 and 14,000 tonnes for the year.
finnCap also acknowledged that the Stage 2 Expansion project is on schedule for commissioning in the second quarter of 2017, and is currently running below budget.