Shares portfolio: Sell-off warnings hang over Sainsbury's
Analysts rate Sainsbury's a sell as competition increases, while GlaxoSmithKline shares are tipped to be a good deal.
The Standard's City team rates which stocks to buy and sell, with analysis on the top traders' deals.
BUY: GlaxoSmithKline
Snap up shares in Britain's biggest drugmaker, advises Collins Stewart. Analyst Emmanuel Papadakis flags up the receding regulatory risks on asthma medicine Advair, and says Brentford-based Glaxo's over-the-counter business and vaccines division has huge potential, as does its presence in emerging markets. "We continue to strongly favour Glaxo's low-risk strategy," Collins Stewart reports. The target price is 1585p.
SELL: Sainsbury's
Sell shares in supermarket giant Sainsbury's says Seymour Pierce. "There is evidence," says the broker, "that although underlying inflation is beginning to pick up, competition has intensified between the multiples and promotional activity has once again moved up a cog."
As a result, it says now is a good time to sell off shares in Sainsbury's, which it reckons will post a pre-tax profit of £660 million for the financial year 2010-2011.
HOLD: Home Retail Group
First-quarter sales performance at the group's Argos chain was "disappointing", but trading at its Homebase outlets was "robust and remains encouraging", according to Singer Capital Markets.
The broker cuts HRG's target share price from 342p to 215p and downgrades it from buy to fair value, flagging up the weak trading at Argos as well as concerns about the group's exposure to "an increasingly cash-strapped consumer".
Trader talk
BlackRock's £4 billion UK equity star Mark Lyttleton has opened a 0.32% short position, or 1.8 million shares, in insurer Legal & General with a face value of around £1.5 million at a close price of 81p.
The shares are held in his £2 billion BlackRock UK Absolute Alpha fund. Although Lyttleton recently pared back his short exposure to the insurers because of concerns about how much capital new European regulations will require them to hold, he is still net negative on the sector as a whole.
He said: "Companies in the insurance sector will argue that their capital positions are fine, but it depends on when the regulator demands they meet solvency requirements. If the rules need to be taken up tomorrow there will have to be widespread funding across the sector. However, the regulator has given them more breathing space."
