Broker tips: Hastings Group, Drax Group, Rolls Royce

Analysts were keen to put their two cents in on UK insurer Hastings Group Holdings after the company, which listed on the London Stock Exchange in October, posted a strong trading update on Wednesday.

Perhaps unsurprisingly, analysts at Goldman Sachs, Credit Suisse and Barclays were all upbeat, with HSBC a little more cautious, after Hastings posted a 19% rise in operating profit for the first nine months of the year, as gross written premiums grew 26%.

Goldman started coverage of the stock at ‘buy’ with a 12-month price target of 204p. “Its combination of a low-cost model, a data-driven underwriting approach and strong counter-fraud/claims capabilities should enable continued growth in both market share and profitability,” said the bank.

Credit Suisse initiated coverage at ‘outperform’ with a 200p price target, saying Hastings offers attractive growth and an appealing price. The bank said growth is underpinned by ambitious targets for policy count expansion through 2017 and a cyclical upswing in motor insurance pricing.

Barclays started the stock at ‘overweight’ with a 198p price target.

RBC Capital Markets upgraded National Grid to ‘outperform’ from ‘sector perform’ and lifted the price target to 1,000p from 920p, saying it sees an attractive risk/reward opportunity.

“National Grid is the kind of utility that makes all other utilities jealous. It has an enviable combination of predictability, asset growth, a secure balance sheet and attractive dividends,” said the Canadian bank.

It said that all things being equal, the share price should increase along with growth in the underlying regulated capital value.

RBC said NG offers a secure and growing dividend with a starting yield of around 5%.

Markets need to look beyond the near/medium term on Rolls Royce, as the company transitions from older generation to new generation engines and its accounting from linked to unlinked, analysts at UBS told clients.

“We believe that the recent profit warning has further tested the market's confidence in the company and now, more than ever, the company needs to provide the market with the requisite building blocks to establish a credible roadmap of how the various elements of cash flow and profit will stack up over the next 4-5 years,” the broker said in a research report sent to clients.

Analyst Charles Armitage kept his buy recommendation unchanged while lowering his target price to 750p from 980p.