Broker tips: Smith & Nephew, Centamin, Balfour Beatty, UK motor insurers

15th Aug 2014 12:14

Shares in Smith & Nephew were under pressure on Friday after analysts at Morgan Stanley downgraded the medical devices maker from 'overweight' to 'equal weight' following a recent strong run in the stock.The bank said that even if US peer Stryker returns with a bid in November, the deal "remains uncertain" and the stock "could start to lose its M&A premium of around 10%" in the near term.Numis Securities has cut its recommendation for Centamin from 'buy' to 'hold', saying that it will be challenging for the Egypt-focused gold miner to hit its full-year output target of 420,000 ounces.The broker said that considering first-half production was just 156,000 ounces, 264,000 ounces will need to be produced in the second half to meet forecasts. It, however, estimates full-year output of just 406,000 ounces.Investors in takeover target Balfour Beatty should sit tight in case a bid battle breaks out for the construction company, according to broker Brewin Dolphin.Berenberg has lifted its target prices for Admiral, Direct Line and Esure but reckons that the UK motor insurance market is "about to enter a very challenging period"."We expect recent declines in pricing to squeeze underwriting margins as claims costs continue to grow, while regulatory change presents a threat to some revenue streams," the broker said. Nevertheless, Esure, famous for the Sheilas' Wheels brand, is now Berenberg's "preferred play" in the sector, as it upgraded the stock from 'hold' to 'buy'. The target for the shares was raised from 267p to 286p.BC