Broker tips: Standard Life, Prudential, Lonmin, Miners

Shares in insurers Prudential and Standard Life got a lift from Barclays, as it upgraded price targets on both stocks in its latest note on European insurance.

The bank increased Prudential’s target to 1,889p from 1,877p, pointing to the company’s earnings on 11 August, which will be chief executive Mike Wells’ first chance to set out his view on the strategic direction of the company and what can be expected under his leadership.

“We expect the earnings themselves to be strong, as Prudential is benefiting from FX tailwinds in the US and in Asia, which should add around 3% to earnings,” it said.

Barclays, which rates the stock at ‘overweight’, said it sees Prudential continuing to grow earnings at 12% compound annual growth rate.

The bank raised Standard Life’s target to 546p from 520p, saying it expects the company’s results on 4 August to show a solid set of earnings, boosted by continued strong inflows of its flagship fund, GARS.

Barclays rates the stock at ‘equalweight’.

Shares in Lonmin were leading the FTSE 350 fallers on Friday after UBS downgraded the platinum miner to 'sell', citing likely downside "even if platinum group metals (PGM) prices recover".

The Swiss bank cut its rating from 'neutral' and, with the shares opening the day at 92.7p, slashed its 12-month price target to 75p from the prior 130p.

PGM prices are expected to recover from their current slump, but Lonmin's efforts to restore its asset base after several years of underspending has led UBS to worry that any cash flow generated will be used to increase capex.

Previously the broker had expected a PGM bounce to give Lonmin the momentum to simultaneously increase earnings and re-start capex projects, but with prices staying lower prices for longer this has become a more challenging possibility.

Volatility has been in the driving seat as a result of the recent gyrations in China’s stockmarkets, but certain commodities will outperform once the fog clears HSBC said.

“We fully acknowledge the near-term risk-off sentiment as the market looks to avoid being caught the wrong side of big moves.

"Looking beyond, we believe that when the fog clears our favoured commodities of copper, zinc and nickel will outperform given their superior demand growth and specific supply-side issues. Commodity selectivity has never been more important,” HSBC said in a research report e-mailed to clients.

In the same report HSBC trimmed its target prices on shares of Anglo American (to 990p from 1000p), BHP (to 1,270p from 1,300p), Glencore (to 360 from 365p) and Rio Tinto (to 2800p from 3050p).

Nevertheless, the broker upgraded its recommendation on Boliden and South 32 to ‘buy’ from ‘hold’.