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Broker views: M&S, Avingtrans and Greggs

28 February 2017 15:36

Jefferies International has double-upgraded its recommendation on Marks & Spencer (LON:MKS) - moving to buy from underperform - as part of its wider look at the UK general retailing sector.

It said: "Jefferies' latest February 2017 UK consumer survey results indicate consumer confidence is unsustainable as inflation bites and technology advancements threaten job security.

"Meanwhile consumer perceptions show M&S is consolidating its omni-channel improvements whilst Next continues to lose its historic advantage."

Next (LON:NXT) and Debenhams (LON:DEB) were kept at hold.

Analysts at finnCap have downgraded their investment rating on Avingtrans (LON:AVG) to hold (from buy) following the engineering group's in line interims, which it says is due to the recent share price outperformance.

Nevertheless, the broker commented: "We make no change to our trading forecasts. There is a strong order book and we look for a production ramp up on the Sellafield, Bruker and Wuhan contracts."

finnCap raised its target price to 240p from 215p.

Deutsche Bank raised its target price on housebuilder Persimmon (LONLPSN) to 2,313p (from 2,069p) after the company reported expectation beating pre-tax profits.

Nevertheless, the broker stuck with its hold call, stating that it sees better risk/reward elsewhere, especially as the shares are trading well ahead of sector averages.

Greggs results were "flat as a pancake" according to Jonathan Pritchard at Peel Hunt.

He said: "Greggs' strategy and tactics are spot on in the tough food-on-the-go sector, but we suspect that positive surprises are unlikely in the near future and forecast momentum is flat."

He also highlighted that the shares are on a PE premium to the sector and it is unlikely they will rerate in the absence of a return of upgrades.

Meanwhile, Investec said: "Well documented headwinds are expected to hold back growth in FY17, but we believe an attractive store roll-out and operating efficiency story over the medium term continues to be undervalued."

The broker repeated its buy rating and 1,225p target.

Shore Capital said that the results were very much as expected and anticipated that the stock was going to do little today.

"We remain of the view that such valuations fairly reflect the short to medium term potential within Greggs, noting management has reiterated it expects rising commodity and labour costs to have a modest impact on margins in the short term," analyst Darren Shirley commented.

Shore maintained its hold stance on the shares.

At 3:36pm:

(LON:GRG) Greggs PLC share price was -34p at 977p

(LON:MKS) Marks Spencer Group PLC share price was +6.05p at 335.05p

(LON:NXT) Next PLC share price was +22.5p at 3832.5p

(LON:PSN) Persimmon PLC share price was +30p at 2060p

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