Broker tips: Burberry, Sage, Sainsbury

13th Apr 2012 11:26

UBS has raised its target price for luxury brand Burberry from 1,370p to 1,580p ahead of its fourth quarter sales update next week.The broker is expecting the company to report a 16.5% growth in sales (constant currency), significantly lower than the 23.7% growth seen in the first nine months of the year. While the price-to-earnings multiple of 19 remains in line with the three-year average for Burberry, UBS clearly thinks this is too expensive and retains a neutral rating with the stock trading at a 20% premium to the European luxury sector.Jefferies has this morning downgraded its rating for business software group Sage from buy to hold, saying it is turning a 'bit more cautious' despite continuing to favour the positioning and management of the company.2012 expected growth rates have prompted a more neutral stance on the stock, with Jefferies forecasting just 3.4% organic growth, down from the previous estimate of +5%. "First-half licence sales are likely to have been particularly weak in Spain, as well as difficult in France and the UK."The broker cuts its target price from 345p to 320p.Sainsbury is continuing to benefit from the woes of supermarket rival Tesco, according to Galvan Research and Trading, which this morning recommended investors to buy the stock."Galvan Research regards Sainsbury as a buy, not only based on the outperformance seen in the past two quarters - especially in terms of like for like sales growth - but as the obvious sector alternative to troubled Tesco as the number one player struggles to maintain growth momentum," said Galvan's head of research, Andrew Gibson.The broker expects the stock to reach its 2012 intraday high of 320p.BC