Broker tips: Housebuilders, Melrose, Intertek, SOCO International

5th Mar 2014 13:10

Credit Suisse has downgraded its rating for the UK housebuilding sector from 'overweight' to 'market weight', telling investors that it is time to take profits."To be absolutely clear we are not calling the top of the UK housing cycle, rather we are calling the top of the equity story, as we believe current valuations already factor in substantial future growth in the next two years," said Research Analyst Harry Goad.Credit Suisse has cut its recommendations for Barratt Developments, Bellway, Persimmon and Taylor Wimpey from 'outperform' to 'neutral', and left both Berkeley and Bovis Homes at 'neutral'.Numis Securities has downgraded its rating for industrial conglomerate Melrose from 'hold' to 'reduce', saying it sees downside risk to the current share price despite the company's strong annual results on Wednesday.Analysts said that the market's focus is now on the next acquisition and the stock's already "heady" rating "appears to already be discounting the next deal".Numis Securities has reiterated its 'buy' rating for Intertek despite the testing and quality control firm missing estimates with its 2013 results, saying that it remains upbeat about its long-term structural growth prospects and returns potential."While 2013 results were impacted by a slowdown in growth in the second half, management provided a more optimistic scenario for recovery progression in 2014," said analysts Steve Woolf and Mike Murphy. Canaccord Genuity has cut its stance on oil and gas firm SOCO International from 'hold' to 'sell', saying the valuation is 'challenging' given that the shares trade at a hefty premium to the sector."SOCO trades at 121% of our central net asset value (NAV) [forecast], a substantial premium to the sector which trades at 82% on average," said analysts Thomas Martin and Charlie Sharp. "We would need to assume a 6.5% discount rate to see our central NAV rise to around our current target price [of 385p]."BC