Broker tips:Pennon, Severn Trent, Acacia Mining, Severn Trent

Analysts at JP Morgan upgraded their recommendations for Pennon and Severn Trent, arguing that concerns about regulatory risk, rising government bond yields and possible nationalisation by a Labour government had pushed the shares to "unusually low" levels.

That trifecta of risks was on top of the "more traditional" decarbonisation, affordability and security of supply balancing act, they said.

"We take this opportunity to highlight stocks in our coverage universe that are oversold, trading at a material discount to 'worst case' nationalisation scenario projections," they added.

Looking out to 2021/22, Severn Trent (target price: 2,250p), United Utilities (target price: 1,000p) and Pennon (target price: 830p) were changing hands at discounts of 1%, 5% and 11% versus their regulated capital values, respectively.

In the analysts' opinion, that made little sense in the context of Labour's nationalisation threat and upgraded their recommendation for Pennon and Severn Trent from 'neutral' to 'overweight' and said they were at 'overweight' on United Utilities, having had no coverage on it beforehand.

At a forward price-to-earnings multiple of 12.5 and with its offering of a dividend yield of 6.6%, their preferred stock in the UK water space was Pennon.

Berenberg initiated coverage on African gold miner Acacia Mining on Friday, with its analysts hitting the Tanzanian-focussed outfit with a 'sell' rating right out of the gate.

The investment bank's analysts said the cost for Acacia of continuing to operate made any investment in the company a "risky trade", as the collapse of the group's relationship with the government of Tanzania is likely to lead to a $300m cash payment and 16% equity stake in the mines.

Considering the possible valuation scenarios relating to the resolution of the government's ban on concentrate exports, the analysts felt posed an "asymmetric risk to the downside".

"The dispute and the ongoing negotiation between Barrick Gold, Acacia and the Tanzanian government encompasses a $190bn tax claim, a $170m VAT receivable (owed to Acacia) and the concentrate export ban, including the ~$240m of net value of concentrates sat waiting for export.

"We feel there is a fundamental distrust between the government and the company (enough to make considering a sale of the assets worthwhile), and that the government is, therefore, looking to guarantee a greater share of the economic value of the mines," wrote analyst Michael Stoner.

In addition to the sell rating, Berenberg issued Acacia with a 140p target price, saying the stock sits in the upper end of its 31p-167p valuation range, which implies 80% downside and only 20% upside from current levels. "A case of asymmetric risk needs to be skewed to the upside when considering trades with this level of uncertainty."

Insurer Esure was boosted by a double upgrade to ‘outperform’ from ‘underperform’ by RBC Capital Markets, which lifted its price target on the stock to 275p from 250p.

The bank said its concerns over the footprint expansion have been answered and it now expects additional service revenues to keep increasing due to more higher premium business being put on the books.

RBC said a higher weighting to ASR versus underwriting profits should provide some protection if motor insurance pricing deteriorates significantly, also noting that the stock is trading at a discount to peers despite a strong growth outlook.

"Following the FY17 results, we are more confident on the ability of Esure to deliver on its footprint expansion plans without risking the business. Whilst combined ratios are similar for the core portfolio and the Footprint 1 portfolio, the total financial contribution per policy from the newer business is far higher due to higher instalment income associated with higher premium business.

"As the business shifts slowly to a higher average premium, we would expect additional service revenues to continue to increase. In addition, we also expect that the company is building some conservatism into the footprint expansion business."

Following the results, the bank upped its 2018-19 net income estimate by 11% to reflect stronger growth than it had modelled and higher ASR based on FY17 and the likely increases as a result of the footprint expansion programme.

Its 2018-19E total dividend estimates were upped by 21%, reflecting a 68% payout ratio.