Broker tips: Vodafone, Burberry, M&S, Talktalk

LONDON (ShareCast) - Vodafone's share price is likely to be buoyed by speculation regarding a Liberty Global (NasdaqGS: LBTYA - news) merger over the coming days, though analysts at Bank of America Merrill Lynch remained cautious. The US bank reiterated an 'underperform' rating on the stock, saying that concerns about each companies' valuations are likely to be a "major stalling point" for any potential deal. Aside from the Liberty speculation, Merrill said: "Our concern remains that [Vodafone's] mid-term capex guidance is too low and that dividend cover is at risk from an already high payout." Nomura has lowered its forecasts for Burberry due to the impact of sterling strength on the fashion house's bottom line, though a 'buy' recommendation was maintained on its "solid underlying strategy".

The broker said it still sees upside to the stock, recommending shareholders to use any short-term weakness in the stock "as an opportunity". "However, we note a cautious outlook statement and pricing decisions, which we will watch carefully for short-term read-across," it said.

After a weak start to Wednesday's trading session, shares in Marks & Spencer (Other OTC: MAKSF - news) jumped into the green after the department store retailer's results beat forecasts, with Investec (LSE: INVP.L - news) lifting its target price from 580p to 620p.

The broker kept a 'buy' rating, saying: "A more confident outlook, highlighting the material gross margin opportunity within GM (NYSE: GM - news) , ongoing outperformance within the Food business, with more space opening, and the announcement of capital returns, should be taken well in our view." Citigroup (NYSE: C - news) has upgraded Talktalk from 'neutral' to 'buy' and hiked its target price from 320p to 475p.

"We see TalkTalk as likely to benefit should one or both of the UK's two big telco deals facing competition authority review be approved," the bank said.