Broker tips: Tesco, Babcock, Sage, Tullow Oil

21st Jul 2014 12:59

A profit warning from Tesco may result in more downgrades, but Shore Capital has upgraded its rating on the supermarket stock from 'sell' to 'hold' after the resignation of Chief Executive Officer Philip Clarke on Monday."With this important development we sense that the market will broadly welcome the change in management, which is a melancholy point to make given the hard and extended graft that Philip Clarke has put into Tesco," said Shore Capital analysts Clive Black and Darren Shirley.The recent falls in the share price of Babcock have been "overdone", according to Investec, after the engineering services group delivered a solid first-quarter update on Monday."The message from Babcock remains consistent and we believe that the stock has been oversold, so we maintain our 'buy' and reiterate our 1377p [...] target price," said Analyst John Lawson.Panmure Gordon has said that its enthusiasm about Monday's announcement by Sage to buy a majority stake in Exact Software Deutschland is "muted" and that the deal "doesn't dazzle"."This cheap acquisition, 1.55 times historic sales, likely reflects that the broader HCM market is an early adopter of cloud, and Sage is buying an old-school on premise solution. Sage should have been bolder and looked to acquire one of this markets disruptors like Acrede."Oriel Securities has estimated that the risked value of Tullow Oil's failed exploration well on its PL 507 project in the North Sea offshore Norway was worth around $150m to the oil explorer."While we don't advocate valuing companies on well by well basis, nevertheless, we suspect an impact on the shares this morning in the 2% range," Oriel said.BC