Broker tips: Qinetiq, Rotork, Tate & Lyle

Analysts at Berenberg lifted their target price on shares of Qinetiq due to the continued "significant" optionality afforded to the company by its comfortable cash position.

In fiscal year 2018, the defence electronics and components supplier's net cash would reach £197.0m and be unrivalled within its sector, they said, making it deserving of a premium.

Despite the "somewhat uninspiring" near-term fundamentals, Berenberg said investors could be confident of Qinetiq's ability to continue investing both organically, through contract capex, and via internal research and development.

The company also had the firepower necessary to acquire earnings before the 2019 margin "pinch point" when the full effect of contract renewal timing would be evident, Berenberg said.

With Rotork shares the worst performing stock in the European capital goods sector over the last quarter due to oil price declines and cost inflation concerns, Goldman Sachs sees a buying opportunity as the risk-reward ratio shifts into more attractive territory.

"Growth could surprise in upstream and midstream, led by momentum in the US, Middle East and China," said Goldman, with its 12-month price target of 280p offering around 20% upside, leading to the reiteration of its 'buy' recommendation.

Furthermore, pricing has stabilised and while downstream capital expenditure remains challenging there are green shoots appearing in maintenance, repair and overhaul.

Excluding oil and gas, US water investment is an "obvious catalyst", although there are "few positive signs" in the power market.

Tate & Lyle is facing a likely softer sugar pricing climate in 2018 and combined with anticipated slow progress towards ramping up its speciality ingredients profits, Jefferies downgraded its recommendation on the shares to 'hold' from 'buy'.

Jefferies, which trimmed its target price to 800p from 870p, said there remains "plenty of upside if Tate if it can convince" around its Speciality Food Ingredients arm, from where management are aiming to generate of 70% of profits in three years' time.

Shares in the company are up 50% from their 2015 trough and Jefferies said it was moving to the sidelines, after a breathless couple of years and a recovery of a slight premium against NYSE-listed Ingredion as the 'Trump discount' has lifted.