Broker tips: Capita, Oxford Instruments, Shell, BP

In a letter to the thus far yet to be named incoming chief executive of the company, HSBC stressed the need for the business process outsourcer to lay out plans to simplify its business and to deliver upon them.

"Capita is a good business, it creates process solutions for the public and the private sector, and there will be demand. Focus on de-cluttering, simplifying, and understanding the risks inherent in long contracts, and complex accounting," the broker said.

Ex-CEO Andy Parker stepped down in March as Capita exited the FTSE 100 index, with the outsourcing firm having seen its market value drop 36% in the last year as cost over-runs, delays and asset writedowns piled-up.

Nevertheless, the business still offered value, the analysts said.

"A new CEO articulating a sensible plan, and returns helped by write-downs, stabilising and the market seems likely to give the benefit of the doubt."

Long duration contracts had the benefit of rendering the industry more 'defensive' than broader industrial companies.

However, they also made evaluating a company's chosen strategy that much harder, HSBC said.

Analysts at Barclays revised their target price for Oxford Instruments's shares higher, hailing recent moves on its portfolio of businesses and balance sheet.

The decision to sell its Industrial Analysis unit would leave a group more focused on higher-margin nanotechnology and services, the broker said.

Its more recent set of results also revealed a return to OCC sales growth in Nanotechnology Tools in the backhalf of 2017 as well better margins across almost its businesses.

Asylum Research was the exception.

Hence, according to the broker the shares offered further upside, especially if the firm could demonstrate the long-term higher-growth potential of its markets.

Against that backdrop, Barclays left its 'overweight' recommendation in place but lifted its target price from 1,070p to 1,145p.

The world's oil majors have made substantial progress in boosting their ability to make profits even in a low oil price environment, but low prices were set to strain their finances again over the short-term, according to Macquarie.

On average, falls in the price of oil would cut their combined cash-flows by 4% in 2017, 9% in 2018 and 10% in 2019, the broker's analysts said.

After slashing their capital and operating budgets, the largest oil producers could cover the cost of their investment and cash dividends at a price for Brent of $50 a barrel, even as they began to reduce debt.

Yet with prices skidding below that level, it was unlikely that "optimistic" scenario could be maintained in 2018 and 2019, although their dividends would be safe as long as the oil price did not fall below $40 a barrel.

Having said that, scrip would probably continue to be used as an alternative to cash dividends.

Against that backdrop, they downgraded their recommendation on Royal Dutch Shell B (target cut from 2,400p to 2,150p), Eni (target cut from €16.0 to €14.0), Repsol (target cut from €15.8 to €14.3) and Chevron to 'neutral' (target cut from $125 to $105), while BP (target cut from 440p to 400p) was cut to 'underperform'.

Only Total (target kept at €50) and Galp (target lowered from €16.6 to €15.9) were kept at 'outperform'.