Broker tips: Provident Financial, Shell, Ocado

Analysts at Liberum added Provident Financial, Pets at Home, Anglo American and Domino's Pizza to their ten-strong list of 'Conviction Sells'.

Provident Financial? 'Forget it', Liberum said, explaining that it saw "no compelling reason" to own the shares - the severe devaluation in their price notwithstanding.

Pets at Home? "It's a value trap with significant pressure across the profit and loss," the broker said.

On a cheerier note, Rio Tinto, Burberry and M&S were taken off 'Conviction sell'.

Regarding the latter two, Liberum said: "we think recent strategic reviews have improved the risk-reward profiles."

When valuing the oil majors, investors need to take into account the investment necessary to replenish their resource reserves with the impact that has on the companies' reserve life and balance sheet gearing, Citi said.

In other words, Big Oil might be able to fully cover its diviend payments at $50 a barrel oil but at a cost; namely, a 20% reduction in their reserve life as a result of underinvestment, it said. For reserve life to grow, the group needs oil at $60 a barrel.

Hence, more changes were needed at the oil majors.

Central to its analysis, geologically Citi believed the US Permian basin was capable of producing at a rate of between six to eight million barrels of crude oil a day, versus just 1.4m b/d at present. That meant output was set to double and then double again, opening the way for cost reductions of roughly 60% (assuming similar learning rates to those at Eagle Ford and Bakken and not much better ones).

Ocado Group's automated warehouse solution and the company's long quest to sell this service to supermarkets around the globe has received backing from Citi, which initiated coverage with a 'buy' recommendation.

Citi, which set a 400p price target for the shares based on the one overseas deal signed so far, feels there is latent demand in the grocery market as the channel shift in retail towards digital that is well under way in other subsectors.

"Grocery has lagged – with complexity and challenging economics damping supply – but penetration is already 5-10% in the lead countries," Citi said, pointing to Wal-Mart, Kroger and Amazon increasing supply in North America.

The bank's base scenario is that Ocado will sign one new international client per year.