Broker tips: IMI, Daily Mail&General Trust, G4S

Societe Generale downgraded IMI to ‘hold’ from ‘buy’ and slashed the price target to 975p from 1,350p after the company said on Thursday that earnings for the year would be at the low end of market views.

“We remain upbeat on the longer-term benefits of the strategic turnaround programme but with global industrial demand taking another leg-down we see little scope for upside surprise over the next 12 months.”

It said the third-quarter statement confirmed a highly challenging operating environment with sales down 5% LFL year-on-year.

With a further fall in 2016 sales and management highlighting rising competitive pressure, margins in the critical engineering division look set to be capped next year at a lower level. IMI also ruled out M&A in the short term given the macro, removing another potential earnings catalyst, the bank said.

Shares in Daily Mail & General Trust fell sharply after Panmure Gordon downgraded the stock to ‘sell’ from ‘hold’ and cut the price target to 700p from 760p ahead of the company’s prelims.

It said DMGT usually offers its first view of FY16 guidance with its FY15 prelims, which are due on 25 November.

Ahead of this, the brokerage has taken a look at current estimates and found them still looking materially too high.

Panmure cut its 20167 earnings per share estimate by 7% to 58p and its 2017 estimate by 19% to 56.6p.

G4S shares slumped on Friday after RBC Capital Markets cut its price target on the stock to 210p from 230p, noting that organic growth has slowed of late.

The Canadian bank said management is talking a long-term improvement story.

“However, exceptionals, business shrinkage and downgrades continue,” said RBC, adding that investment is tough while net debt/EBITDA remains high.

It added that the stock has been a poor performer, down 10% this year, but with a full valuation relative to peers.