Broker tips: Glencore, BAE Systems, Speedy Hire

LONDON (ShareCast) - (ShareCast News) - Glencore (Xetra: A1JAGV - news) shares tumbled on Monday on the back of a fairly downbeat assessment from Investec (LSE: INVP.L - news) , which warned the stock holds little value for shareholders. "The challenging environment for mining companies leads us to the question of how much value will be left for equity holders if commodity prices do not improve," the brokerage said.

"Despite the drastic action that management has announced recently (even assuming all of the measures are successfully implemented), a spot price scenario results in an almost complete collapse in forward earnings such that no meaningful estimate of shareholder value can be derived under our price-to-earnings methodology." It (Other OTC: ITGL - news) also said that Anglo American (LSE: AAL.L - news) was also in a weaker position than rivals BHP Billiton (NYSE: BBL - news) and Rio Tinto (LSE: RIO.L - news) if commodity prices remain depressed.

"While it offers upside potential for equity holders on our base case assumptions, applying spot pricing suggests a meaningfully negative impact on equity value." Bernstein upgraded BAE Systems (LSE: BA.L - news) to 'outperform' from 'market perform', with an unchanged price target of 545p.

It said the recent pullback in BAE's share price has widened the valuation gap compared to US peers considerably, without any corresponding deterioration of fundamentals.

The broker added that it had an incrementally more positive view towards BAE's outlook for growth in international markets, buoyed by recent news of Typhoon sales to Kuwait, and the potential for further orders to come from Saudi Arabia and Oman.

The analysts also said there was upside potential for contract wins for aircraft and ground combat vehicles, though timing the timing was difficult to estimate.

Investec downgraded Speedy Hire (LSE: SDY.L - news) to 'hold' from 'buy' and put its 100p price target under review until it gets more clarity on a turnaround after the company issued its second profit warning in three months.

"This is another disappointing update and underlines the scale of the task faced by the new management. Given the scale of the downgrades and level of uncertainty, it is difficult to ascribe a target price at present," it said.

The brokerage cut its full-year 2016 earnings per share estimate by 58% to 1p and its full-year 2017 forecast by 55% to 1.5p.

It said what has become clear since the last warning is that the lack of equipment availability and customer services issues are now going to take longer than anticipated to resolve.