BEST OF THE BROKERS
Goldman Sachs has upgraded the house builder from “neutral” to “buy” with a target price of 159p. The broker has also upgraded rival Persimmon to “buy” after reviewing the property sector, and now expects broadly flat new-build house prices over the next two years, thanks to low build volumes and stable unemployment. Goldman thinks Barratt’s margins will rise by two per cent a year, thanks to its land bank, though returns on properties will be tougher.
UBS has upgraded the mobile phone group from “neutral” to “buy” with a new target price of 190p, following the firm’s agreement with partner Verizon to pay a dividend next January. UBS says the payout is larger and earlier than it had expected, and predicts that the payments could rise from £2.8bn to £4bn over time, pushing Vodafone’s free cash flow up to 30 per cent. The broker also predicts five per cent jump in earnings per share.
Citigroup rates the British Airways parent “buy” with a target price of 300p. The broker thinks IAG’s recent results were the best of all the European flag carriers so far this quarter, thanks to passenger revenues rising 9.4 per cent. While higher costs have dented earnings forecasts, Citi still expects to see fresh synergies between BA and Iberia and possibly acquisitions, with BMI and TAP Air Portgual seen as likely takeover candidates.