Broker tips: B&M, UK life insurers, Vodafone

Although the trading update for the first quarter contained just four weeks' worth of new sales data for the core UK business, they did imply an exit rate of approximately 11%.

The analysts termed that "very encouraging".

An update on Heron and France contained in the same trading statement was "positive", they added.

The target price for the shares went up from 565.0p to 620.0p, while their recommendation stayed at 'overweight'.

Analysts at Citi pointed out on Thursday that the UK life insurance sector's direct exposure to Thames Water was "minimal".

They estimated that it was in a range of 0.2-0.3% of Aviva, L&G and Phoenix Holdings's annuity portfolios and less than 0.5% M&G's.

Furthermore, most of that debt was held at the opco level.

"Zooming out, Utilities represent c.10%-20% of corporate bond portfolios and there could be some downward pressure from ratings migration here (especially from other water companies) but overall we note that UK life insurers have a strong track record of managing credit risk.

"While the fundamental impact appears manageable this is another potential area of investor concern for what is a credit geared subsector."

Analysts at Berenberg cut their target price for shares of Vodafone despite what they said was its cheap valuation and 10.5% dividend yield.

To back up their case, they pointed to the three reasons why investors typically shunned telecoms companies: a dearth of growth, excessive leverage their complexity.

"It is hard to get too excited about M&A when the underlying operations are expected to keep underperforming, as shown by only a muted share price reaction to the recent UK merger news," they wrote in a research note sent to clients."

They did keep their recommendation for the shares at 'hold', but the target price was reduced from 95.0p a share to 85.0p.

On their estimates, Vodafone shares were changing hands on nine times forecast earnings.