Broker highlights: Banks, conveyor belts and oilfield services

Analysts at Barclays Capital have been re-running their numbers in respect of rival high street banking group Lloyds (LON:LLOY) and, based on their revised economic assumptions, expect its “net interest margin to rise helped by the interest rate environment and the planned MBNA credit card acquisition”.

The bank added: “UK economic prospects remain challenging and uncertain but less severe than we had previously anticipated.”

Seeing more margin expansion, modest credit quality deterioration and strong capital returns, Barclays has upgraded its stock rating to ‘overweight’ (from ‘equal weight’) and upped its price target to 75 pence a share (from 55 pence), implying around 16 per cent potential upside.

Meantime, the conveyor belt was running smoothly for Fenner (LON:FENR) after it received a double dose of upgrades on the back of its latest trading update.

Numis, which upgraded to a ‘hold’ rating (from ‘reduce’), said: “The shares are not expensive on EV/Sales 1.0x for a business capable of double digit returns.

“However, we still want to see the changes of the board concluded given that investors must look through the short term earnings recovery.”

Numis has a target price of 250 pence on the shares.

Commenting on Fenner’s first quarter trading update, Peel Hunt said: “The group is clearly now on an upward trajectory and we anticipate more material upgrades for FY2018E as the key end markets continue to recover, enhanced by further market share gains.”

The broker upgraded its investment rating to an outright ‘buy’ (from ‘add’) and boosted its target to 300 pence per share (from 260 pence).

Separately, finnCap and N+1 Singer maintained ‘buy’ and ‘hold’ ratings, respectively, leaving their targets unchanged at 300 pence and 256 pence apiece.

Elsewhere, Canaccord Genuity turned its attention to the oilfield services sector believing 4Q16 should begin to show upgrades, after an extended period of seemingly ever-lower forecasts.

Target prices were increased across the board, while James Fisher & Sons (LON:FSJ) was upgraded to ‘hold’ (from ‘sell’).

“In terms of ratings we are cutting Saipem to SELL, as we struggle to see expectations for a recovery in earnings being met, and upgrading James Fisher to HOLD, as the stock has lagged the broader recovery and so no longer looks as expensive as it did,” analyst Alex Brooks said.

Canaccord lifted FSJ’s target to 1,600 pence per share from 1,450 pence.

At 2:23pm:

(LON:FENR) Fenner PLC share price was +40.75p at 277.25p

(LON:FSJ) Fisher James Sons PLC share price was +6.5p at 1592.5p

(LON:LLOY) Lloyds Banking Group PLC ORD share price was +1.09p at 65.74p

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