Broker tips: Mining stocks, HSBC, BG Group, Pearson

Citigroup downgraded its stance on the UK metals and mining sector on Monday to ‘neutral’ from ‘bullish’ after cutting its short and medium term outlook for iron ore.

Citi now expects iron ore price to $45 per tonne in 2015 and $40 per tonne in 2016 and said "upside in the sector is now capped". The bank lowered Rio Tinto, Glencore, BHP Billiton and Lonmin to 'neutral' and cut Vedanta Resources and Anglo American to 'sell'.

UBS has lowered its stance on miner Ferrexpo from 'neutral' to 'sell', saying it now expects iron ore to suffer a "super down cycle".

The bank cut its profit forecasts for Ferrexpo and said that the company is at risk of becoming cash flow negative by 2016. There is also risk of liquidity "getting tight" over the next 12 months ahead of the repayment of a remaining $285m loan in April 2016.

Banking giant HSBC had its rating on Monday upgraded to ‘equalweight’ from ‘underweight’ by Morgan Stanley.

Analysts at the US investment bank said the reason behind the rating upgrade is because HSBC's stock has underperformed the Stoxx 600 banks index by around 17% year-to-date.

Investec has raised its rating for natural gas outfit BG Group from 'sell' to 'hold' following last week's surprise £47bn takeover bid by Shell.

The broker said that despite the market's concerns, the deal is unlikely to be rejected by shareholders. However, given that Shell's offer represents a 50% premium to the closing price the day before the deal, "we do not anticipate a counter-offer", Investec said.

Pearson, the provider of educational books and the owner of the Financial Times, had its rating lowered to ‘underperform’ from ‘buy’ byJefferies.

The US investment broker said recent performance has taken the stock to a lofty multiple and the valuation "looks stretched".