Broker tips: Morrison, Astra Zeneca, Ocado

Analysts at UBS heaped praise on Morrison management's decision to go 'back to basics' which helped the grocer confound market expectations over the past year, but judged that the shares's valuation was now 'fair' - although sentiment towards the stocks was too negative.

Management's rethink helped the firm to improve availability, customer service and range, leading it attain the biggest gains in customer satisfaction from among the Big 4 grocers, according to their data.

Hence, UBS raised its target price from 207p to 240p whilst reiterating its 'Neutral' recommendation.

However, with the discounters opening new stores UBS had concerns about Morrison's ability to retain clients. Indeed, Asda and the discounters were its most direct competition, UBS said.

AstraZeneca was downgraded to 'Reduce' from 'Hold' on Friday by HSBC, while five other European pharmaceutical companies also saw their recommendations lowered by the bank.

The Cambridge-based firm’s target price was unchanged however and remains at 4500p.

HSBC asserted that on the face of things the pharmaceutical industry looks "optically attractive", but that current prospects are based on core earnings, which do not tell the full story of the sector’s vulnerability.

For AstraZeneca, much depends on the outcome of their MYSTIC study into the effects of its cancer treatment drug durvalumab.

"Our valuation already assumes a positive outcome from the pivotal MYSTIC study which suggests, on our forecasts, that more optimism than any risk of a negative outcome is priced into the shares," the HSBC note said.

Ocado slumped on Friday as UBS downgraded the stock to 'sell' from 'buy' and slashed the price target to 200p from 425p saying that meeting consensus revenue and margin expectations will be tough.

UBS said technology leadership has seen Ocado evolve best-in-class operational efficiency, reducing the cost of online grocery to profitable levels and underpinning a superior customer offer.

"We believe its flagship customer fulfilment centre (CFC) in Erith, opening 2018, could generate an impressive 22% internal rate of return and has potential to drive earnings and a cashflow inflection. However, we believe the market is moving against Ocado, presenting roadblocks to such a scenario."