Broker tips: Oxford Instruments, Midwich, BT

Analysts at ShoreCap reiterated their 'buy' recommendation for shares of Oxford Instruments on the back of the company's update on trading at its annual general meeting.

In particular, they highlighted the scientific instrument manufacturer's net cash position as at 7 September, which had improved to £70m thanks to a "robust trading performance and balance sheet protection".

"Clearly, Oxford is well-positioned for future success as this represents a very strong position but also gives us comfort that the Group can address any unexpected challenges," they said.

On a similar note, they forecast that the firm would ultimately emerge in good financial health and generating cash for its 2021 financial year and a return to normalisation during the subsequent financial year.

They also noted that the disruption from Covid-19, which had led to the closure of many academic institutions across the globe who purchase the firm's scientific cameras, microscopy products and electron analysers, had been offset by strong order growth among commercial clients.

The situation of its academic customers should also begin to normalise in the back half of FY 2021, they said.

Analysts at Berenberg cut their target price on audiovisual distributor Midwich from 620.0p to 460.0p on Tuesday, citing "significant disruption" caused by the Covid-19 pandemic.

Berenberg said Midwich's 2020 first-half results reflected the significant disruption caused by Covid-19, with a "considerable reduction" in organic growth and substantial margin headwinds resulting in roughly 82% and 55% cuts to its 2020 and 2021 earnings per share estimates for the group.

However, importantly, the German bank highlighted pressures the company had faced as a result of the coronavirus outbreak may have actually caused no structural damage.

Given the impact on profitability over the course of the full-year, Berenberg expects Midwich's leverage to reach 2.2 times net debt/underlying earnings, which it said was "well within management's targeted range" and should help the company rapidly de-lever as profitability rebounds.

"While there is considerable uncertainty about the market's eventual recovery, Midwich still has the potential to continue its geographic expansion within the $100.0bn AV market," said Berenberg, which also retained its 'buy' rating on the firm.

Barclays upgraded its stance on shares of BT to ‘overweight’ from ‘equalweight’, lifting the price target to 160p from 130p as it took a more constructive view on the stock.

The bank said its key reasons for taking a more positive view are a rapidly improving outlook for Openreach and fibre to the home, supported by a recent meeting with management, and de-risked consensus estimates with an attractive valuation.