Broker tips: GKN, Weir, Sage

31st Jul 2012 10:42

Jefferies has maintained its 'buy' rating and 220p target price for engineering giant GKN, saying that the shares could be in for a 'significant' jump."We sense that sentiment towards GKN is still being heavily swayed by caution about global light vehicle production, but GKN is likely to be able to generate at worst a robust performance in 2H12 and 2013, in our view," Jefferies said."Our simple logic is that if earnings come to be viewed as robust, attention could switch to how earnings might increase against a stable or more positive backdrop. We believe that could lead to significant share price performance."In spite of the poor market reaction to Weir's interim figures on Tuesday, Investec has retained its 'buy' recommendation for the Scottish engineering group, saying that the results 'should be taken positively'. The broker uses Weir's international peers to derive its price target (currently trading at 12.5 times next year's earnings), which is lifted from 1,770p to 1,850p.UBS has downgraded its rating for accountancy software group Sage from 'buy' to 'neutral' on valuation grounds but has raised its target price from 295p to 305p to reflect the impact of recent buy-back activity.The broker notes that Sage's recent investor day set out plans to re-accelerate growth by focusing investments on a 'core' set of solutions, while moving away from 'non-core' businesses. It also wants to develop a range of low-end and mid-market cloud-based solutions."While we believe management has now set a coherent strategy in motion, the shift to the cloud (and its half-way house the 'subscription' pricing model) is in its earliest days, and has risks," the broker said.BC