Broker tips: Anglo American, BHP Billiton, BG Group, Burberry, IHG

Shares in UK listed mining giants BHP Billiton and Anglo American slumped on Thursday after two investment banks downgraded their ratings on both companies.

Credit Suisse and Investec Securities both downgraded BHP Billiton with the former now at 'sell' versus 'hold' while the latter at 'underperform' versus 'neutral'. Anglo American also got the chop with both investment banks taking their ratings a notch lower - Credit Suisse now rates the stock at 'neutral' versus 'outperform' while Investec has it at 'hold' from 'buy'.

BG Group’s rating was upgraded to ‘hold’ from ‘sell’ by Societe Generale on Thursday after Royal Dutch Shell’s proposal to buy the oil producer.

“In our view, it represents a fair price for BG, assuming oil recovers towards $80 per barrel by 2017 – at which level (SocGen’s) sum-of-the-parts value of 1,274p corresponds to the current value of Shell’s offer. We therefore upgrade BG’s rating,” SocGen said, while retaining a 1,275p target price.

Shares in Burberry were on the rise on Thursday in London on the back of bid speculation, while JPMorgan Cazenove gave the stock an extra boost by lifting its target price from 1,470p to 1,560p.

JPMorgan, which kept a 'neutral' stance, lifted its earnings estimates for the luxury group by around 5% for the next two years due to the positive impact of Burberry's sourcing in euros. "This benefit may have been somewhat overlooked by the market (Burberry has underperformed meaningfully European peers year-to-date) although it could, to a large extent, be erased by possible price adjustments, in particular possible price cuts in Asia Pac, and if the pound were to weaken versus the euro," the bank said.

Shares in Holiday Inn owner Intercontinental Hotels Group (IHG) shot up after US broker Jefferies raised its rating on the stock to ‘hold’ as it sees the company as a potential takeover candidate.

The broker thinks mergers and acquisitions are set to return in the hotel industry as growth slows. “IHG looks to be particularly vulnerable,” said the broker who raised its target price on the stock to 2,400p from 2,000p.