Broker tips: Mining stocks, Dixons Carphone, Xaar

After the recent falls across the mining sector, Liberum Capital has upgraded its rating on the category from 'sell' to ‘hold’, though the broker still sees plenty of downside risks in 2015.

Liberum has lifted its stance on Rio Tinto, Glencore and Anglo American from ‘sell’ to ‘hold’, while BHP Billiton was left at a ‘hold’, with share prices having reached its “once-bearish” targets.

“Even though we expect fundamentals to continue to weaken in 2015 on slowing Chinese investment demand and a strengthening dollar, we also expect the equities to re-rate to trough multiples. Capex, cost and capacity cuts will continue, and should provide earnings and balance-sheet relief.”

Investec has lifted its target price for electrical product and mobile phone retailer Dixons Carphone from 395p to 465p and kept a ‘buy’ rating after the company’s well-received maiden interim results.

Investec said: “[The] dividend yield is circa 2%, but free cash flow increases in FY16, potentially offering scope for further shareholder returns.”

A bullish update from industrial inkjet printing group Xaar wasn’t enough to make Numis Securities turn more positive on the stock on Wednesday as the broker kept its ‘hold’ recommendation on the shares.

“Successful cost cutting will help mitigate negative operation gearing but we still expect a large reduction in profits next year. The longer-term potential remains apparent in our view driven by new product introductions and the potential for other markets to convert to digital printing but near-term limited visibility drives our ‘hold’ rating.”