Broker tips: AstraZeneca, GSK, Persimmon, Crest Nicholson, Premier Foods, Rightmove, Moneysupermarket, Rolls-Royce

UBS has downgraded AstraZeneca and upgraded rival GSK as part of its latest review of the European pharmaceutical sector.

The Swiss bank now has a 'buy' rating on GSK, switching from a previous 'sell', while AstraZeneca was downgraded to 'sell' from 'buy'.

Jefferies has upgraded Persimmon and cut its rating on Crest Nicholson following a review of UK housebuilders.

In a note published on Tuesday, the broker upped Persimmon to 'buy' from 'hold', and cut Crest Nicholson to 'hold' from 'buy'.

RBC Capital Markets initiated coverage of Premier Foods on Tuesday with an 'outperform' rating as it said the shares were materially undervalued even after recent strong performance.

The bank argued that Premier's "lowly" valuation owes more to historical dysfunctionality than the current state of affairs.

RBC said that assuming an underlying revenue growth rate of 2.5% by 2026, flat underlying trading margins from 2024-26, terminal growth rate from 2035 of 1.5% and an 8.5% cost of equity, its adjusted present value derived price target is 180p.

JPMorgan Cazenove downgraded Rightmove to 'underweight' from 'neutral' and cut its price target on the stock to 493.0p from 585.0p as it pointed to higher R&D and opex spend.

JPM said that Rightmove was likely to generate below sector average 7% growth in EBITDA between 2024 and 2026, "making it increasingly hard to justify" a valuation on 16.2x estimated 2024 EV/EBITDA, hence the downgrade.

Jefferies downgraded Moneysupermarket on Tuesday to 'hold' from 'buy' and slashed its price target to 265.0p from 305.0p.

The bank said it expects growth in insurance, which makes up about 50% of revenue, to decelerate in 4Q23 and throughout FY24 as the group laps tough comps and car insurance premium disinflation takes hold.

Analysts at Berenberg lowered aerospace and defence giant Rolls-Royce to 'sell' from 'hold' on Tuesday, citing an unfavourable risk/reward scenario, but marked up their target price on the stock from 100.0p to 240.0p.

The German bank stated that pricing, the most important factor for intrinsic valuation, will be "a challenge", given current reliability issues for key engines, which serve an airline industry that typically operates on low margins and appears to be approaching peak earnings.