Broker tips: Next, Lamprell, Hansteen

It said the 15% drop in the share price leaves Next on a 7% discount to the sector which seems like an over-reaction.

DB said that while the results were in line with expectations, guidance for the year ahead was trimmed 3% on a more cautious consumer outlook.

Trends in the customer credit business also continue to be slightly negative and management expects this structural decline to continue, the bank noted.

“However, the underlying brand remains solid according to industry data, our new credit book sensitivity analysis suggests a c£8m per annum base case profit drag.”

The bank summed up its five reasons to be more positive on the retailer by saying: the brand remains strong; incremental avenues of growth offer attractive returns; the profit drag from the decline in credit customers is manageable; the balance sheet can allow more returns later in the year; the valuation is now more attractive.

In addition, it pointed out that on top of its UK fashion business, 20% of Next’s revenues are derived from the Home categories.

“This category provides more resilience against averse weather, modest exposure to the ‘catch-up’ spend in bigger ticket categories (if it does not fizzle out), and long term growth potential.”

UAE-based oil rig maker Lamprell was under the cosh after Canaccord Genuity cut its rating on the stock to ‘hold’ from ‘buy’ and slashed the price target to 95p from 150p saying the company’s transformation has stalled.

The brokerage said that while there is a large medium-term opportunity in the various negotiations with Saudi partners, it is doubtful the market will be willing to pay for uncertain 2018+ earnings in the next 18 months.

In addition, Canaccord said it was equally sceptical about what investors are likely to assume in terms of return on capital.

“The current (commercial) market for oil services companies is offering little if any return on invested capital. As a result, we are downgrading the stock,” it said.

Canaccord said that until last week, Lamprell was continuing to claim the rig business was generally better than widely perceived and specifically that the National Drilling Company of Abu Dhabi would exercise its various options to order further rigs.

“It is now likely that these options will lapse at the end of March, and that no new rig is likely to be ordered for many months if not years,” it said.

Also, Canaccord said efforts to secure orders in new market segments - notably Norwegian upstream projects - have not met with success meaning that backlog has shrunk materially, down to $740m at the end of 2015.

The outlook for industrial property investor Hansteen in 2016 is uncertain, according to Numis.

The full year 2015 results saw the completion of its 2012 to 2015 long term incentive plan (LTIP), bringing a payout of £51m to the two chief executives.

Capital values achieved a record increase of 11.1% as UK and German yields compressed 90 basis points (bps) and 100bps respectively in the year.

"This leaves the business in an interesting position: material yield compression seems unlikely…but the occupational market is robust, and the joint CEOs have sold shares worth c.£7.4m each…but maintained a holding of 9.6m shares each," Numis said.

"If management delivers over the next three year F-LTIP period as it has the last investors will have benefitted from market-beating returns; however management has indicated that to achieve this it may push loan to value ratio up."

Numis retained its 'hold' rating and target price of 113p, saying the new period is "clouded with uncertainty, and at -11% discount versus spot net asset value we see better risk adjusted returns elsewhere".