BUZZ-Top of the Street: Zurich, Spectris, Ferguson
A round-up of notable broker activity this morning from Europe's top-ranked* analysts:
** Macquarie raises Zurich to "neutral" on purchase of ANZ's Life business in Australia believing the deal will increase 2018 earnings by 2.8%
** Morgan Stanley (Xetra: 885836 - news) upgrades Kion Group AG (IOB: 0QFU.IL - news) to "overweight", saying Supply Chain Solutions will have a better 2018, and the discount to peers looks punitive
** Citi downgrades equipment rental company Ashtead to "neutral", citing stock valuation
** Morgan Stanley cuts Atlas Copco (LSE: 0R82.L - news) to "equal-weight", saying "nothing is broken – the company is among the best-in-class businesses in Capital Goods – but we feel this is the tail end of a cyclical rally"
** Jefferies cuts Berkeley Group to "hold" on valuation grounds
INITIATIONS AND REINSTATEMENTS
** Berenberg initiates Hiscox (Swiss: 27373019.SW - news) with "buy", saying co is well placed to continue to grow its retail division between 5-15% in the long term, adding earnings may benefit from a short-term boost as a consequence of recent catastrophes
** Berenberg starts Beazley (LSE: BEZ.L - news) with "hold", saying that although there is more upside to come in the long run, at current levels the short-term upside looks limited
** Goldman Sachs (NYSE: GS-PB - news) starts Spectris (Other OTC: SEPJF - news) with "buy", seeing scope for operating leverage and potential for meaningful M&A in software/services in 2018 among growth catalysts
** GS initiates Spirax-Sarco with "neutral" as stock valuation is near peak and broker expects 140bp EBIT margin decline in 2018 (vs. 2016) due to dilutive recent acquisitions
** Credit Suisse (IOB: 0QP5.IL - news) starts Ferguson with "outperform", 6,000p TP, representing potential upside of 16%, says end of a multi-year disposal process will allow a stronger, more profitable business to emerge
(*Analyst rankings from Thomson Reuters StarMine. Scale is from 1-star to 5-star with 5 being best. Analysts ranked on earnings accuracy as well as relative performance of recommendations over trailing 12-month & 24-month periods.)