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Broker views: Transport and software

20 September 2017 16:00

Equity research analysts at HSBC upgraded their recommendation on transport company Stagecoach (LON:SGC) to hold (from reduce), following the share price weakness and ahead of the trading update on 28 September.

The bank commented: "Long term, we think it right to exercise caution, but we think it unlikely that further trading weakness will emerge short term."

"The recent share price weakness now means the shares look fairly valued versus the wider sector," HSBC added.

Target price unchanged at 160 pence per share, implying 0.5% potential upside.

Meanwhile, Liberum Capital upgraded the stock to hold (from sell) in a note to clients, on Tuesday.

"Despite our concerns about earnings momentum, industry headwinds and bus re-regulation, we believe these risks are now better reflected in the current share price," the broker explained.

Its target price was left unchanged at 155 pence.

Goldman Sachs believes the strategic appeal for the shares of engineering software provider Aveva (LON:AVV) has been brought to the forefront again following its recent announcement regarding a possible merger with Schneider Electric's industrial software business.

Given news of the transaction, the City heavyweight has removed the stock from its Pan-Europe Sell List and upgraded to a Neutral rating. Goldman also increased its price target to £24 per share (from £18.50).

"While we don't take a view on the likelihood of the deal completing, we believe the merger would result in a company with more scale and a broader footprint of offerings spanning process industry CAD and manufacturing/automation systems," analysts said.

At 4:00pm:

(LON:AVV) AVEVA Group PLC share price was +36p at 2449p

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