Broker tips: StanChart, Lloyds, Miners, Ultra Electronics

Goldman Sachs stuck to a 'buy' recommendation on StanChart and 'sell' on Lloyds and Barclays after adjusting its earnings estimates for the sector to reflect recent market developments and ahead of the release of the Financial Policy Committee's Financial Stability Report on 27 June.

StanChart continued to be the UK-listed lender most exposed to the interest rate cycle in the US, Goldman explained.

Furthermore, it enjoyed a "strong" capital position which may allow for the resumption of dividends as soon as with its next set of interims.

Lloyds on the other hand was most at risk from heightened competition in the domestic UK mortgage market.

"We believe that current valuation levels do not reflect future margin headwinds."

Continued capital building at Barclays meanwhile was expected to drive a more muted outlook for dividend and profitability.

Regarding the upcoming release of the FSR, Goldman reminded clients that the FPC had already flagged an increase in lenders' counter-cyclical capital buffers.

Nonetheless, the expected increase from 0.0% to 0.5% was likely to be muted, Goldman said, as the Bank of England was expected to remove overlapping aspects of Pillar 2.

Deutsche Bank reiterated a 'neutral' view on the European, Middle East & Africa mining sector, telling clients they were cautious given the modest deterioration seen in macro indicators for the sector.

In parallel, they also revised commodity price forecasts which resulted in roughly 11% downgrades to its earnings per share estimates for the sector in calendar years 2017 and 2018.

The broker marked down its EPS estimates for BHP Billiton (Hold), Glencore (Hold) and Anglo American (Hold) over 2017 to 2019 by an average of 9%, even as it upgraded those for Rio Tinto (Buy) and South 32 (Hold) by about 7% and 20%, respectively.

Higher price projections for aluminium lay behind the latter.

Analysts at Deutsche lowered their target price for BHP Billiton from 1,450p to 1,400p, for Anglo American from 1,100p to 1,000p and for Ferrexpo (Buy) from 280.0p to 270.0p.

KAZ Minerals's (Sell) target was taken down from 370.0p to 350.0p.

Meanwhile, its model overhauls and lower copper price forecasts led it to slash its EPS estimates for Antofagasta and First Quantum (Buy) by 25% and 40%.

Analysts at Investec reiterated their recommendation on Ultra Electronics, telling clients the shares were "meaningfully" undervalued with momentum in the company's orders set to continue.

The defence electronics firm's order momentum had improved in recent months after the end of Continuing Resolution in the States in May and after securing a handful of export orders, analyst Rami Myerson explained in a research note sent to clients.

He expected that trend would continue, leading to "good" momentum into fiscal year 2018.

Supported by those recent larger contract wins, the company's book-to-bill ratio was running at 1.1 times.

"This bodes well for H2 where order cover is similar to the prior year despite the CR being signed off later in the year. We are increasingly confident the group will meet full year expectations including cash (in excess of 80% conversion) and should drive a re-rating," he said.