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Broker tips: Barclays, Next, Wolseley

LONDON (ShareCast) - British bank Barclays (LSE: BARC.L - news) had its rating downgraded to 'hold' from 'buy' over at Investec Securities on Wednesday. The broker said the main plank of its investment case for buying Barclays over the past year has been its extreme relative and absolute cheapness, reinforced by an absolute cost reduction story and the material FX tailwind in evidence in the Q3/Q4 2014 results, which Investec (LSE: INVP.L - news) thinks, is likely to continue in 2015.

"However, (with Barclays) now trading on 0.9x 201 5/16 tangible net asset value, we think the valuation case is no longer overwhelming in the context of our deteriorating expectations for the scale and pace of return on equity recovery," said Investec.

The broker also chopped its price target on Barclays to 270p from 295p.

Directory in the UK at Next (Other OTC: NXGPF - news) is showing fewer growth levers than hoped for.

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However, there is upside to the outlook for cash generation.

"Without having to fund creditor book growth, cash conversion should average near 100% over the 5Y vs 85% over the past decade, and management is happy to pay it all out as special dividends," explained analysts at Credit Suisse (LSE: 0QP5.L - news) .

The potential exists for the company to increase leverage and further buybacks should not be excluded, the Swiss broker said.

For that reason, Credit Suisse upped its price target on the company's shares to 7,450p from 7,010p, placing it on a running yield of 5.5% However, given demanding comps over the next two quarters, some questions over the impact of slowing housing transaction to homeware sales, and the slowing trend of credit customers are likely to keep a lid on the share price until after 1H results in September.

A neutral recommendation was maintained.