Broker tips: Aberdeen, Sainsbury, Fuller Smith & Turner



LONDON (ShareCast) - Bank of America Merrill Lynch (BofA) has cut its rating for Aberdeen Asset Management (Other OTC: ABDNF - news) from 'neutral' to 'underperform' following a strong performance so far this year, saying that the stock's premium valuation is unjustified.

"We downgrade Aberdeen to 'underperform', as organic inflows could slow significantly from consensus expectations. With the stock up ~20% year-to-date, the valuation premium to peers looks unwarranted," the broker said in a research note on Friday.

Investec (LSE: INVP.L - news) expects a strong first-quarter update from supermarket group Sainsbury (LSE: SBRY.L - news) next week, but has retained its 'hold' rating for the stock amid worries about the wider sector.

"Sainsbury is our favoured stock in the sector, but sector concerns on long-run profitability restrict our recommendation to 'hold'," McCarthy said, saying that the sector is in the middle of a "major structural transition".

Panmure Gordon has lifted its target price for pubs and brewery group Fuller, Smith & Turner from 755p to 834p on the back of a strong update on current trading on Friday.

However, with the stock trading at 20 times 2013 earnings and just 5-6% earnings growth expected this year, the broker has reiterated its 'hold' recommendation.

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