Broker tips: Glencore, HSS Hire, British American Tobacco

A global benchmarking analysis looking at ten metrics showed Glencore ranked first or second on seven of those, analysts Alon Olsha and Shai Hill said, even if Rio Tinto and BHP Billiton are best ranked historically.

The shares also offer twice the potential profit growth than its peers over the next five years, the analysts said.

Furthermore, Macquarie expected the outfit's commodity basket, especially zinc and copper, to show the strongest price momentum over the next three years.

With $12bn in excess cash to distribute by 2019 and with management owning 15% of the firm, Glencore had both the financial wherewithal to reward shareholders and a good reason to use it, they said.

Liberum initiated coverage of HSS Hire at 'sell' with a 46p price target.

The brokerage said its cautious view is predicated on concerns over the constraints the group's leverage is having on its ability to deliver growth in the rental business.

"Given the margins on offer in this segment, we see risks to medium-term consensus estimates from lower than expected rental revenues. With the current valuation failing to fully reflect these risks, and the absence of any yield support, we initiate with a sell."

In addition, Liberum said it sees material downside risk to the company's equity base given the growth rates currently underpinning the goodwill associated with the core rental business.

The brokerage said that given the nature of HSS’s business, it's appropriate to value the company on an asset basis and on this basis, it reckons the shares are currently worth 46p, suggesting that despite the recent weakness they are still overvalued.

Analysts at Citi trimmed their medium-term earnings estimates for British American Tobacco modestly but reiterated their 'buy' recommendation on the shares following a meeting with its chief.

Adam Spielman reduced his estimates for the company's earnings per share by 3% for 2017 and a further 4% for 2018 and 2019 as a result of foreign exchange headwinds, with half of that coming from changes in the pound- US dollar exchange rate.

'Cable', the monicker used by currency traders to refer to the Sterling-dollar rate, accounted for nearly half the downwards EPS revisions, with fluctuations in the currency pair set to factor more heavily in the firm's financials after its merger with Reynolds, Spielman said.

Nonetheless, Spielman said he came away "enthusiastic" on the prospects for the outfit's core business after meeting with its boss.

The acquisition of Reynolds was running on schedule and may deliver revenue synergies, he said.

As as aside, Spielman said he wouldn't be surprised if the company began reporting (and setting dividends) in US dollars.