Broker tips: BP, Amec, Rexam
JP Morgan has lifted its rating on BP to 'overweight' from 'neutral' and raised its price target to 625p from 600p, in a review of European oil companies.
The broker now names BP as its top pick in the sector, noting that the company's shares have dropped by 25% over the last two years and saying that the strong first quarter should help restore confidence in its growth prospects.
JPM has raised its price forecast for West Texas Intermediate crude to $90 a barrel.
However, it has lowered its European and US refining margin assumptions, adding that the European sector could continue to struggle. It cites the risk of a fall in crude prices, limited growth prospects among the big caps and unconvincing valuations, with relative multiples still above historical norms.
JPM cuts its price target on Shell to 2,000p from 2,050p, keeping its 'underweight' rating and on BG Group to 1,236p from 1,400p, with its rating retained at 'overweight'.
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Amec led the way in the FTSE 100 this morning after UBS upgraded the engineering and project management group to 'buy' from 'neutral' on valuation grounds.
UBS, which kept its 875p price target on Amec, said the upgrade followed recent weakness in the company's share price. The drop is unjustified, UBS said, noting that Amec has made two modest acquisitions in line with its strategy, including that of project services company Ryder Hunt.
Credit Suisse has downgraded consumer packaging company Rexam to 'neutral' from 'outperform' and cut its price target to 540p from 560p in a sector review.
The broker said it was changing its ratings in the sector to reflect shifts in pricing power.
