Broker tips: StanChart, Hikma Pharmaceuticals, BT Group

Analysts at Investec took their recommendation on shares of StanChart down from 'hold' to 'sell', telling clients the outlook for earnings per share and return on capital are now less convincing.

"Indeed, we find that the "Q1 conversation" tends to take place around the PBT line. We see the prospects for EPS/ROTE progression as much less convincing. Downgrade to Sell (from Hold)."

The broker's Ian Gordon did nevertheless bump up its target price on shares of the lender from 685.0p to 690.0p.

RBC sounded a fairly upbeat note on BT Group despite the multiple calls on its cash which the company is expected to face over the next couple of years.

Its Openreach arm announced a consultation with all telecoms providers on full fibre FTTP starting summer, which the broker said would be detailed, complex and require a lot of planning.

That was in fact a positive for BT, as it would push any need for the roughly £5.0bn of capital expenditures associated with that initiative out to at least the beginning of its 2019 fiscal year.

Perfect. In the meantime, it would have more resources to deploy for pensions, a "substantial" amount of exceptionals in 2018 and accelerated tax in fiscal year 2019 associated with IFRS15.

RBC trimmed its target price from 425.0p to 415.0p while reiterating its 'outperform' recommendation on the shares.

JP Morgan slashed its target price on stock of Hikma Pharmaceuticals saying US regulatory approval of its generic Advair application might be postponed, which in turn made the investment bank less confident on the firm's entire drug pipeline.

On 11 May the Food and Drug Administration issued Hikma a major complete response letter in relation to its Abbreviated New Drug Application for VR315, its generic version of rival GlaxoSmithKline's Advair Diskus.

That, analyst James D. Gordon said, implied a delay on the drug's launch until early 2019 - with a 50.0% probability of success.

He also trimmed his estimates for the remainder of Hikma's Roxane pipeline.

All of the above drove sharp cuts to his earnings per share estimates for the year between 2017 and 2020 of 18%, 35%, 14% abnd 8%.

Summing it up, the target price on the stock was brought down from 2,400p to 1,800p.