Broker tips HSBC, Shell, BP, Morrisons, Tullow, Aberdeen

Investec has recommended investors to 'sell' shares of global banking giant HSBC, downgrading the stock from 'hold' after a "very disappointing" set of annual results last month.

In spite of the weak results, which were some 33% below consensus, HSBC's UK shares have rebounded 10% over the past month. "We do continue to believe that HSBC’s generous payout is sustainable. However, when the dust settles, we think investors will see RoE>CoE as merely a 2018 aspiration and act accordingly. 'Sell'," he said.

Shell's proposed £47bn takeover of BG Group, while strategically sound, "negates our previous investment thesis", according to Jefferies which downgraded the stock from 'buy' to 'hold' on Tuesday.

"We believe Shell paid a full price that constrains its financial flexibility – the primary driver of our previous view that Shell was the most defensive stock in the sector if oil prices remain low. We expect that many investors held a similar view. Our preference would now be Chevron," the broker said.

Oil major BP had its rating dropped to ‘neutral’ from ‘buy’ over at Citigroup on Tuesday as it believes ‘value’ is now reflected in the share price.

“We think the market now better reflects the inherent value in BP. A good-news story around a self-help agenda, narrowing Russian discount rates and a favourable Macondo Phase II ruling have all driven the equity story in recent months,” said Citi.

Broker Shore Capital has applauded the rapid swishing blade of Morrison's new chief executive David Potts, who on Monday night removed the seventh of the 10 board members in place when he started in March.

ShoreCap reiterated its 'buy' stance on Morrison’s shares on the belief that the group "can deliver strong free cash generation to shareholder benefit in due course, predicated upon an ongoing improvement in trading, a material cut in capital expenditure and moderate responsibilities to landlords and the pension fund. Speedy cultural change represents a good start for the new CEO."

Tullow Oil's share price surged on Tuesday after Citigroup raised its rating on the stock from 'neutral' to 'buy', saying that the oil group's portfolio quality is "undervalued" by the market.

The bank highlighted the "quality and defensiveness" of Tullow's portfolio, and said concerns about its balance sheet and timing of the TEN development are "more than discounted in the current valuation".

Aberdeen Asset Management shares fell on Tuesday with traders attributing the decline to a rating downgrade of the company’s stock to ‘underperform’ from ‘sector perform’ by RBC Capital Markets.

“We see better opportunities elsewhere in our coverage universe after the recent share price outperformance. We further believe that a company that is experiencing downgrades in an upgrade environment and has a cautious outlook should at least trade at a 15% discount to sector averages,” said RBC.