Broker views – Latest reactions

In retail today, Canaccord Genuity has changed its stance on discounter B&M (LON:BME) by upgrading its investment rating to ‘buy’ from ‘hold’, which it says is mainly due to the potential from rolling out the Jawoll format in Germany.

The broker added: “We believe the Value sector will continue to outpace growth of the wider UK retail market over the medium term.”

Canaccord upped its price target to 295 pence a share (from 265 pence).

Meanwhile, (LON:BOO) was upgraded by analyst Alistair Davies at Investec after the online fashion retailer delivered top line growth ahead of expectations and confirmed the long-awaited acquisition of PrettyLittleThing (PLT).

He commented: “With improved performance at both the top line and margin levels, and a stronger revenue base at PLT than previously thought, we move from Add to BUY.”

Investec also increased its target to 150 pence (from 130 pence), implying a forecast total return of 26.8 per cent.

City heavyweight Deutsche Bank turned its attention to the European utilities sector, resulting in a downgrade for Centrica (LON:CNA) – cut to ‘sell’ from ‘hold’ – while maintaining ‘hold’ calls on Drax (LON:DRX), National Grid (LON:NG.) and SSE (LON:SSE) and a ‘buy’ rating on Severn Trent (LON:SVT).

Commenting on the income driven nature of the sector, it said: “European utilities are fundamentally yield plays but we seek to diversify our picks as investors look for a pick up in global growth and inflation.”

It added: “We remain mindful of political risks in Italy, downgrade Centrica to Sell on UK retail politics and retain a Sell on EDF on nuclear capex risks.”

In the financial sector, Barclays Capital has reaffirmed its ‘overweight’ position on retail-focused broker and wealth manager Hargreaves Lansdown (LON:HL.) and increased its price target to 1,560 pence a share (from 1,500 pence).

It reckons the recent share price slump represents a good entry point for investors.

The bank pointed out that the shares have lost 19 per cent of their value since the beginning of the year, while the FTSE All-Share index has risen 9 per cent over the same period.

At 1:43pm:

(LON:BME) BM European Value Retail share price was +5p at 265.8p

(LON:BOO) Plc share price was +15.25p at 133.5p

(LON:CNA) Centrica PLC share price was -3.05p at 218.05p

(LON:DRX) Drax Group PLC share price was +2.8p at 317.1p

(LON:NG.) National Grid PLC share price was +4.5p at 925p

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