Broker tips: Genel Energy, Reckitt Benckiser, Burberry Group

Analysts at Canaccord Genuity downgraded their recommendation on shares of Genel Energy following the recent string of top level management exiting the firm, especially those announced the day before.

As many as five top directors, including chief Tony Hayward and finance director Ben Monaghan, had announced their intention to step down from their posts in quick succession over the previous six weeks.

However, while the latter was "disappointing" what truly irked analyst Charlie Sharp was the announcement on 5 June that Genel's founder, Nat Rothschild, and non-executive director Simon Lockett were also leaving.

"Very surprising," Sharp said.

Citi reiterated its 'buy' recommendation and target price on shares of Reckitt Benckiser, telling clients it saw potential for double digit earnings per share growth over 2018 to 2020.

Key to the broker's investmemt thesis was RB's "unique asset mix" whose unique features would allow sales to grow by between 4.5% and 5%.

Indeed, following a detailed analysis of the company's portfolio revealed that its 'real' growth rate in 2016 was 100 basis points above that of its peers.

RB also had a unique Route To Market in pharmacies, which RB would be able leverage to raise sales of recently-acquired Mead Johnson's products by 1% a year.

"New RB" could deliver double digit EPS growth over 2018-2020e — This is 300bps above industry "new normal" and without extreme (and risky) cost cutting.

Analysts at HSBC downgraded their recommendation on shares of Burberry Group from 'hold' to 'reduce', telling clients the company would continue to underperform its peers for longer than the market was expecting.

Above all, the company needed to reinvigorate its top line growth.

"All in, every shareholderfriendly initiative seems to have been looked at to enable Burberry shares to be protected in the absence of what, in our view, would be the only real solid booster: a sustainable rebound in sales growth," they said.

To that, one also had to add the shares' demanding valuation at 23.8 times analysts' forecasts for its 2018 earnings.

Incoming management, including its new boss Marco Gobbetti in early July, might succeed in boosting sales "but that could take a while", the analysts said.