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BP
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RSA Insurance Group
BP
Buy at 565p (this week 554p) recommends J P Morgan Cazenove. For the six entities involved in the Gulf of Mexico oil leak (BP, Anadarko, Mitsui, Transocean, Halliburton and Cameron) the aggregate loss of shareholder value equates to $50 billion – a figure way above the likely clean up and litigation costs. This suggests that longer term strategic consequences are being considered. However, governments will not jeopardise energy security, notes the broker. The incident will not stop deep water drilling in the Gulf of Mexico or anywhere else, with investors over reacting, concludes J P Morgan Cazenove.
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Hold at 2200p (this week 2127p) advises Singer Capital Markets. The clothing and household goods retailer recently announced a good first quarter trading update, comments the broker. Internal self help measures continue to gain traction, especially at the catalogue Directory business. However, prospects for the sector are getting tougher and sentiment is likely to worsen, believes Singer. In all, despite a modest upgrade to 2011 earnings, Singer has downgraded its investment stance from buy to hold.
RSA Insurance Group
Hold at 118p (this week 117p) cities Numis Securities. A recent first quarter trading update from this general insurance group saw an encouraging return to growth in the UK, highlights the broker. Furthermore, a new pet insurance deal with Tesco should add premium income of £100m, whilst the group continues to push through single digit rate increases on renewal business across its geographical regions. On the downside, both the Chilean earthquake and the harsh UK winter weather impacted. On balance, uncertainty surrounding the sustainability of any upturn, particularly in the UK, currently provide for a hold rating, concludes Numis.
- Brokers’ tips are compiled by Hargreaves Lansdown, the stockbrokers. The brokers’ views are their own and not necessarily those of The Telegraph.
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