Broker tips: Relx, GSK, TalkTalk

Relx, formerly Reed Elsevier, got a boost on Friday as Deutsche Bank bumped the stock up to 'buy' from 'hold' and hiked the price target to 1,750p from 1,630p, saying the share price correction has created an opportunity.

DB argued that the recent selloff, which has seen the shares drop 17% from their peak, represents an attractive entry point.

It attributed the share price decline to a rotation out of bond proxies, adverse currency moves, a number of broker downgrades and worries around the scientific information division. However, it reckoned these concerns have hit the stock too hard, giving investors a chance to buy into a high quality, cash generative and subscription driven business.

"Relx is a steadily compounding stock, with circa 4% organic top line growth, mid-single digit operating profit growth and high single digit earnings per share (at constant FX). We think the valuation is now back in attractive territory following 12 months when multiples had become too rich for our tastes."

Kepler Cheuvreux upped its stance on pharmaceuticals giant GlaxoSmithKline to 'hold' from 'reduce' on Friday, lifting the price target to 1,360p from 1,340p as it said the worst-case scenario for the stock was now priced inKepler's 'reduce' case had been based on investors underestimating the impact of generic US Advair on the pharma business's operating profit, as well as stronger-than-expected HIV competition. But investors appear to now be pricing in worst-case scenarios for HIV and US generic Advair, both of which catalysts have become less negative since the new guidance issued by the company this week.

It noted that the last of the three generic Advair developers had a complete response letter from the FDA on 8 February. The FDA sends a complete response letter when it has completed its review of a new or generic drug application and decided that it will not approve it for marketing in its present form.

Kepler also pointed out that GSK is suing Gilead, the maker of bictegravir and its key HIV competitor, for patent infringement, which could lead to a royalty stream.

Talktalk's profit warning and proposed placing elicited a mixed reaction among City analysts and institutional investors, with Goldman Sachs unimpressed and reiterating its 'sell' recommendation, while RBC Capital Markets hoped this was the beginning of a new era.

TalkTalk shares tumbled for a second day on Friday, the day after the telecoms group cut its dividend, reduced earnings guidance and asked shareholders for £200m to strengthen its balance sheet and invest in a big new fibre-to-the-home (FTTH) broadband project.

Talktalk shares were down another 3% on Friday to 105p, making it around a 14% fall for the week and almost 30% in 2018 so far and 70% from 2015's high above 400p. Stories of a shareholder "revolt" over its fundraising were not helping, with the Times reporting that at least one heavyweight shareholder had called for the telecoms company not to go ahead with the fundraising as a row apparently erupted over whether existing investors were being unfairly treated.