Broker tips: Rio Tinto, Intertek, Balfour Beatty, Berkeley, Betfair

Citigroup has said that a potential spin-off of Rio Tinto’s Canadian aluminium business could be good for the business.
It believes Alcan is “worth more outside of Rio than within” and said it doesn’t offer Rio any diversification benefits given its overall margins. “We believe there would be 10-20% value uplift on Rio from spinning out Alcan.

Intertek‘s shares were given a boost on Friday after an upgrade by UBS from ‘neutral’ to ‘buy’, with the bank saying it sees a “positive risk-reward” balance despite the company’s exposure to the recent plunge in oil prices.

After the 30% sell-off since the start of 2014, the stock now trades at 16 times earnings compared with its long-term average multiple of 18. This, UBS said, is an “attractive entry point where we still admire the long-term fundamentals”.

Balfour Beatty’s rejection of a Ł1bn bid for its public-private partnership (PPP) portfolio was a “brave move” by management, according to analysts at Investec.

“Whilst we recognise current appetite from the secondary market for PPP assets, Ł1bn cash on the table given Balfour Beatty’s current predicament looks a tempting bid. It would give the incoming chief executive officer significant firepower to undertake the substantial and costly turnaround required and importantly accelerate this process dramatically. Brave or foolish?”

Shore Capital has maintained a ‘buy’ stance on Berkeley Group after interim results from the housebuilder smashed estimates on Friday, saying that trading is still strong despite recent worries about a slowdown in London.

“As we have expressed before Berkeley is so much more than just a proxy for the London market and we can be confident that profits and the promised dividend can be delivered.”

Betting giant Betfair has received a boost, as Barclays has revised upward its operating profits and labelled the company its “top pick” among gambling stocks.

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